The financial security in retirement does not happen by itself. Planning and commitment are needed and, yes, money. One way to have more retirement money is to pay less in taxes and plan tax smart retirement strategies that not only manage investments, but the taxes associated with them
Data on American Retirement Planning
- Less than half of Americans have calculated how much they need to save for retirement.
- In 2012, 30 percent of workers in private industry with access to a defined contribution plan (such as a 401 (k)) did not participate.
- The average American spends 20 years in retirement.
Start saving for retirement and maintain objectives
If you are already saving, whether for retirement or another goal, keep doing it! You know that saving is a compensatory habit. If you are not saving, it is time to start doing it. Start small if necessary and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Create a plan, keep it and set goals. Remember, it is never too early or too late to start saving.
Know your retirement needs
Retirement is expensive. Experts estimate that need at least 70 percent of their pre-retirement income – for people asalariodos low, 90 percent or more – to maintain your lifestyle when you stop working. Take responsibility for your financial future. The key to a secure retirement is to plan in advance.
Contribute to plan retirement savings from their employer
If your employer offers a savings plan for retirement, such as a 401 (k), register and contribute what you can. Your taxes will be lower, your company may provide more and automatic deductions facilitate the process. Over time, compound interest and tax deferrals make much difference in the amount you manage to accumulate. Find out your plan. For example, how would it help to get the full employer contribution and how long would you stay in the plan for that money.
Learn about the pension plan from your employer
If your employer has a traditional pension plan, find out if you are covered by the plan and how it works. Ask for a personal statement to know how much it benefits your benefit. Before you change jobs, find out what happens to your pension benefit. Find out what benefits can be had from a previous employer. Find out if entitled to benefits from your spouse’s plan.
Consider basic investment principles together with tax implications
How savings can be as important as how much you save. Inflation and the type of investments you make play an important role in how much will be saved at retirement. Learn how your savings or retirement plan are invested. Meet the investment options your plan and ask questions. Put your savings in different types of investments. By diversifying thus is more likely to decrease the risk and improve the return. Your investment mix may change over time depending on a number of factors such as your age, objectives and financial circumstances. Financial security and financial literacy go hand given.
Do not touch your retirement savings
If you withdraw your savings for retirement now, you will lose principal and interest and may lose tax benefits or pay fines for retirement. If you change jobs, leave your savings invested in your current retirement plan or transfer to an IRA or your new employer’s plan.
Ask your employer to start a retirement plan
If your employer does not offer a retirement plan, suggest they start one. There are a number of plan options available retirement savings. It is possible that your employer can initiate a simplified plan that can help both you and your employer.
Invest money into an Individual Retirement Account (IRA)
You can deposit up to $ 5.500 per year in Individual Retirement Account (IRA, for its acronym in English); can contribute more, even if you are 50 years of age or older. You can also start with much less. IRAs also provide tax advantages.
By opening an IRA, you have two options – a traditional IRA or a Roth IRA. The tax treatment of contributions and withdrawals will depend on the option you select. Also, the after-tax value of retirement will depend on inflation and the type of IRA you choose. IRAs can also provide an easy way to save. You can set it so that sum automatically from your checking or savings account is deducted and such amount is deposited in the IRA.
Find out about your Social Security benefits
Social Security pays benefits that are, on average, equivalent to about 40 percent of what you earned before retirement. May estimate their benefit on retirement estimator on the website of the Social Security Administration.
Ask questions about retirement planning
While these points are meant to point you in the right direction, you need more information. Read our publications listed in the back panel. Talk to your employer, your bank, your union or financial advisor. Ask questions and understand the answers. Get practical advice and act now.