Everyone is looking forward to their retirement years, the dream of not having to wake up and go into the office anymore. While it is something that everyone equally deserves to look forward to, not everyone is equally prepared for it.
Unfortunately, retirement is not a given anymore. If you do not begin planning now, it could be difficult for you to go without an income later. The sooner you start, the sooner you will leave the workforce and enjoy retirement stress-free.
How to Easily Save for Retirement This Year
Saving for retirement does not have to be a chore. You can make it effortless for your self by following these tips. All you must do is change a few simple habits in your daily life. The small changes these habits produce will add up, and cumulatively the effect will be significant.
- Ensure You Receive the Maximum Amount from Your Employer’s 401K Contributions
If you work in a company that offers a 401(k), you should ask HR whether the company matches your contributions. Most major companies offer their employees something called a 401(k) matching contributions.
One of these allows you to have any money you deposit into your retirement savings account in the form of a 401(k) will also be matched dollar for dollar by your employer up to a certain percentage of your annual salary.
Many employers offer as much as 6% of their employees a yearly compensation as a bonus for people maximizing 401(k) contributions. All of these contributions have a double bonus as well. 401(k) funds are not subject to taxes if you wait to withdraw them until after you reach the age of retirement.
- Reduce Your Household Monthly Bills
Electric Companies in Connecticut charge their customers based on the amount of electricity they use. This is measured in units called kilowatt-hours. You are charged by the kilowatt-hour for electricity. Many people are upset when they get surprising energy bills every month.
Monitor your household’s energy usage and water usage so you can keep your monthly costs to a minimum by reducing unnecessary waste. There are many areas of your life that you likely overspend. Only you will know where you can cut back the most. It would be better if you tried to cut back in any area of your life where it is possible.
- Max Out Your 401K Contributions
Any money that you contribute to a 401(k) savings account up to a specific limit set by the IRS each year will not be subject to tax. Instead, it will be taken out of your pretax income.
This allows you to make more out of the money you have been paid already. It is simply an unwise choice not to take advantage of any 401(k) pretax earning contributions you can make in a given year. It will only benefit you in the long run and make reaching your retirement goals easier.
- Open an IRA and HSA
If you are already maximizing your 401(k) contributions and would like to know if any other tax-advantaged savings accounts can help you prepare for the retirement, you are in luck. One is a health savings account. While these are not necessarily for retirement, many people in their retirement years have significant medical expenses.
Health savings accounts allow you to save money from your pretax income to pay for healthcare costs. IRAs are another tax-advantaged investment option for people who want to contribute to their retirement accounts as much as possible.
Funding Retirement Stress-Free Retiring with enough money to support yourself financially is quite the feat. This does not mean that you need to stress over reaching the goal. As long as you set in place a plan and consistently stick to it over the years, you will reach it inevitably. Do not forget to enjoy the ride along the way.