When it comes to your retirement, you want to make sure that you have more than enough to last throughout your golden years. This can be confusing to try and navigate on your own, especially if you're considering converting your 401K to a Roth IRA. However, our quick tips will help to set you up for a long and comfortable retirement.
Tip One - Start Early
- Ideally, you want to start saving for your retirement early. You should start saving and investing as much as you possibly can into your retirement now and let your compound interest go to work. In two or three years, your retirement investment will start earning more interest for you, just by letting it sit and grow.
Tip Two - Meet Your Employer's Contribution
- If your employer offers a retirement plan, see what they'll match for a contribution. This could be anywhere from 1% and up, and you want to make sure that you're putting at least this amount in every check at a minimum. Your employer could match 50% of any employee contributions up to 5% of your annual salary amount. If you ear $50,000 annually and contribute $2,500 into your retirement, your employer will contribute $1,250 per year.
Tip Three - Consider Raising Your Contribution
- If you get a raise, continue to raise your retirement contribution. Ideally, you want to contribute at least half of whatever you earn for any raises to your retirement. It may tempt you to take your tax refunds or bonus payments and blow them on something big, but you could use this as additional retirement funds and treat yourself with something smaller.
Tip Four - Convert Your 401K to a Roth IRA
- If it's possible, look into converting your 401K to a Roth IRA account. You'll get several more investment options with a Roth IRA like real estate, gold, or individual stocks. You also get greater control with a Roth IRA on when you sell, buy, or move your investments to one sector or the other. Finally, they also allow you to withdraw your earnings, contributions, dividends, and interest when you retire tax-free.
Tip Five - Use Catch-Up Contributions for 50 and Older
- You do have restrictions on how much you can contribute to your retirement until you hit age 50. Once you hit this age, you can take advantage of catch-up contributions. These allow you to put more into your retirement in a single year to help you boost your savings if you started saving late in your life or if you don't have as much as you'd like in your account.
Tip Six - Budget Your Spending
- If you don't have a budget in place, it's essential that you make one so you can monitor exactly where your money goes each month. Mint is an excellent budget tool that can help you budget your spending, cut back on it, and have more to add into your retirement account.
Grow Your Retirement with Homeland Estate and Financial Services
Are you ready to start saving for your retirement or boost your potential savings? Maybe you'd like to take advantage of tax deductions or financial planning, contact us. We're happy to help set up your retirement and maximize your savings today!