If you find yourself getting closer to the date you pictured retiring but you haven’t been able to save anything toward that goal, then you’re not alone. It’s actually a fairly common situation, financial advisors say.
“I think people just don’t want to talk about it because it’s almost taboo,” says Cory Phillips, a financial advisor at Fort Pitt Capital Group in Pittsburgh, who helps clients prepare for and live in retirement. For people in their 50s, the average retirement account has $160,000, according to Fidelity. But one out of every four adults has no retirement savings at all.
If you have about a decade to go until retirement, there’s still plenty of time for your money to grow in a retirement account like an IRA or an employer-sponsored plan such as a 401(k) or 403(b). When invested in stocks and bonds, your money has the potential to double in as little as seven to 10 years, according to experts, so put as much into those accounts as you can afford to as soon as possible.
You can put up to $19,500 into your 401(k) in 2021, and if you’re 50 and older you can take advantage of catch-up contributions, which allow you to stash an additional $6,500 in your 401(k) account this year. The contribution limit for an IRA stands at $6,000 for 2021, plus an extra $1,000 for those age 50 and above.
It’s important to note that standard deductions aren’t for everyone. In fact, if you have a large amount of mortgage interest, deductible taxes, business-related expenses that weren’t reimbursed by your company, and/or charitable donations, it probably makes sense to itemize your deductions.
Sit down with a CPA and go over your personal situation to determine whether it makes sense to itemize. Then get in the habit of saving receipts and keeping good records. Remember, in the end, it’s not always what you make, but what you save that counts—particularly as you get closer to retirement.
One of the best and simplest ways to increase your income in retirement is to delay collecting Social Security. To do this, consider continuing to work part-time to cover expenses up until a later age. It can be difficult to remain in the workforce as you age, but Parrish recommends you attempt if at all possible, “because that’ll yield more than just saving some more money,” he says.
Don’t forget to either obtain disability coverage or make certain that your job offers some sort of group disability benefit. The idea behind obtaining such coverage is simple: to protect yourself and at least a portion of your income and nest egg just in case the worst should happen.
Fresno portfolio advisor– Soutas Financial appreciated these points: If you have about a decade to go until retirement, there’s still plenty of time for your money to grow in a retirement account like an IRA or an employer-sponsored plan such as a 401(k) or 403(b). In fact, if you have a large amount of mortgage interest, deductible taxes, business-related expenses that weren’t reimbursed by your company, and/or charitable donations, it probably makes sense to itemize your deductions. Consider continuing to work part-time to cover expenses up until a later age. Don’t forget to either obtain disability coverage or make certain that your job offers some sort of group disability benefit.
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