Odds are just barely in your favor if you’ve started setting aside money and assets for your retirement. Apparently in America, reaching retirement goals isn’t always a top priority. According to the National Institute on Retirement Security, some 45 percent, or almost 40 million working-age households, “do not have any retirement account assets.” This may be a scary reality check for you. If you haven’t setup any type of a retirement account and you’re over the age of 35, you could be in dire straits when you hit retirement age of 65-70 years old. According to the NIRS, some retirement-age households hold only $12,000 for their retirement. Maybe you’re doing much better than that, and if so congratulations! Keep saving and keep contributing to your IRA, 401(k) or any other retirement savings plan to reach your retirement goals.
The statistics may be surprising to most people, but the fact is, most Americans have not saved enough to reach their retirement goals. They will likely face a financial crisis later in life and have to continue working.
Here at Tax Alternatives II, we encourage all our clients to take advantage of the tax savings, but also to be prepared for retirement. Make realistic retirement goals and work to achieve them. Here are 3 important steps you should take so that you can assure you’ll be financially prepared when the time comes to retire.
Retirement is supposed to be the time in your life when you can relax a little, achieve some of your life’s dreams that maybe you didn’t have time for when you were busy working, and just breathe! In order to retire comfortably there are many different variables you need to consider:
- Retirement Age
- Investment Returns Histories
- Pensions Available
Experts note that it’s important to save roughly 85 percent of your pre-retirement income. That comes out to somewhere between 8 and 12 times your annual income to reach your retirement goals. However, that amount really depends on at what age you intend to retire. The younger you retire, say 65, raises that number to the higher end, while waiting just another 5 or so years can lower it down substantially.
Many Americans plan on working past the typical retirement age of 65 because of this estimate. As the life expectancy for Americans grows, so does the delaying of retirement, or at least continuing to work during retirement.
A tax-advantaged retirement strategy is recommended by Tax Alternatives II in order to help you stay on track and take advantage of the tax code that has been put into place to reward those who are saving.
While there are a lot of options out there for investing, consider these options to help you find a place to start saving so you can meet your retirement goals.
- Contribute to a Traditional of Roth IRA regularly. The Federal Government allows Americans to contribute up to $5,500 annually to those under 50, and $6,500 if you’re over 50 years of age.
- If you have an employer provided retirement account, such as a 401 (k), which is a pretax retirement plan, up to $18,000 per year can be contributed if you’re under the age of 50. 50 and up get to contribute up to $24,000 per year!
- Offset medical expenses by opening and contributing up to $3,400 a year in a Health Savings Account.
If you have any questions or would like a consultation with one of our professionals here at Tax Alternatives, don’t hesitate to reach out to us. You can call us at 615-742-1099 or send us a message through the form below for a fast response back!