Six Ways to Boost Your Retirement Savings
Preparing for retirement is a methodical process for most Americans. You have to consider a lot of things such as how much to put away in savings, when to save, and which investment accounts make the most sense for you.
There are so many different things to consider when it comes to saving toward retirement. Here are some of the best tips financial experts recommend when it comes to saving for retirement.
Saving for retirement is a lot more difficult when you carry a lot of debt. Many financial experts suggest the snowball debt recovery method.
Begin by paying money toward your smallest debt first, then keep making payments until that debt is paid off. What you should then do is keep up the momentum and put money toward your next smallest debt. You would be surprised at how much motivation you will feel after paying off just one of your debts. You will often feel more motivated to attack your debts more aggressively following this method.
Mortgages are the major debts that affect retirement. Paying off your mortgage as early as possible is one of the best ways to reduce your retirement expenses. According to the Consumer Financial Protection Bureau (CFPB), about 30 percent of homeowners 65 or older still carry mortgage debt.
Take Advantage of Employer Benefits
If your employer has a 401(k)-matching program, take advantage of it.
Contribute the maximum amount you legally can toward your retirement savings plans to receive the maximum benefits. Starting earlier is better than later.
Consider Permanent Residency Location
Where you choose to live in retirement plays a big role in your overall cost of living. Not only that, but where you live will affect how much Medicare insurance premiums will be and how much you pay in taxes.
Nevada, Tennessee, Texas, South Dakota, Florida, Wyoming and Washington have zero income taxes. However, please note that some states, such as Tennessee, do tax dividends and interest. Fortunately, the majority of states don’t tax Social Security.
Evaluate Potential Healthcare Costs
As previously mentioned, really consider how much insurance premiums are and the access to care available to you when you think about where to live in retirement. This is because how much you pay for healthcare greatly depends on where you live. Insurance premiums are different and higher depending on where you live. Always investigate how much your premiums will be for all aspects of your health.
Get quotes early for insurance. That will help to budget for your future.
Enroll in a Health Savings Account
Preparing yourself for healthcare costs is a great way to build a good financial base for your retirement. Health savings accounts (HSAs) are one of the best tools for saving for healthcare costs in retirement because they are triple tax advantaged.
In 2020, you can contribute up to $3,550 as an individual or up to $7,100 for families and people aged 55 or older can contribute an extra $1,000 contribution each year as a catch-up contribution.
The money contributed to an HSA is your money forever and can even be invested in stocks and bonds to further boost your retirement savings.
Utilize Catch-up Contributions
The moment you turn 50 years old, you can start benefiting from catch-up contribution opportunities. People who are 50 or older can put extra money into their 401(k) and IRA.
You can contribute an additional $1,000 per year toward your IRA and $6,000 each year to your 401(k). Utilizing these extra contributions can help boost your retirement nest egg over the next 15 years tremendously.
Danielle K. Roberts is a Medicare insurance expert and co-founder at Boomer Benefits, where her team of experts help baby boomers with their Medicare decisions nationwide.
More to Read: