We all dream of the time when we’ll be able to retire, enjoy life, maybe do a bit of traveling. But, to keep your dreams on track, you need to take steps to ensure that you’ll have enough savings.
1. Do an audit of your debts.
How close are you to paying off your mortgage? Do you have credit card debt or personal loans?
Figure out how long it will take you to pay these off. If you can get debt-free before retirement, you’ll have that much more to live on.
2. Figure out how much income you’ll have.
Are you expecting a company pension? How much will your Social Security payments be? These numbers will help you figure out how much you’ll need to save to have the standard of living that you want.
3. Reallocate your assets.
Most financial analysts say that it is a good idea to move retirement savings into safer and more stable vehicles as retirement gets closer. For instance, if you have had money in highly volatile stocks, move some to stocks with a more stable track record. You may even wish to move some into investments like Treasury bonds. These produce less income over time. But, you will not get caught having to withdraw retirement savings during a downturn.
4. Put your savings into overdrive.
As you get closer to retirement age, the IRS allows you to put more money into tax-protected investments like IRAs. You can make additional catch-up contributions of $1000 to an IRA and up to $6000 in a 401K. Be sure to make contributions to both your and your spouse’s accounts to maximize the benefit. If you are eligible for an health savings account (HSA), you should consider maxing out your savings there, as well. Contributions to an HSA are made pre-tax, so they lower your tax burden. And, unlike FSAs, your contributions to HSAs are yours to keep.
These steps can help put you in the best position. By assessing your current situation, conquering debt and socking away all you can, you can better assure a comfortable retirement.
Are you ready to create a plan for living the life you’ve always dreamed about? Contact us today to schedule your complimentary discovery meeting.
Your Guide to Financial Independence
Rick Epple, CFP(r)