Saving For Your Retirement Fund

When it comes to retirement funds, the most anxiety-inducing step is beginning to save. That’s why our first tip is to start today. A year from now you’ll regret the countless times you said “I’ll start tomorrow”. Even if it’s only twenty dollars, start contributing as it will energize and motivate you to continue doing so.

A great method of saving is to contribute to your 401(k), which your company likely offers to match or at least contribute a certain percentage. Along the lines of this, you should take a look at your 401(k) program and educate yourself in order to take full advantage. In addition, you should also aim to open an Individual Retirement Account, or IRA.

You have two options for an IRA depending on your income level and other factors. Contributions to a Traditional IRA may be tax-deductible and the investment earnings have the opportunity to grow tax-deferred until you make withdrawals during retirement. Although, if you meet the income eligibility requirements for a Roth IRA, you also have the option to contribute to that. A Roth IRA is funded with after-tax contributions, therefore once you turn 59 ½, qualified withdrawals, including earnings, are federal-tax-free (and may even be state-tax-free!) if you’ve held the account for up to five years.

Lastly, if you are age 50+, take advantage of catch-up contributions. One of the reasons we mention to start saving early is because yearly contributions to IRA’s and 401(k) plans are limited, so it’s best to start as soon as possible. Yet once you reach 50, you are eligible for catch-up contributions where you can go beyond normal limits. If you haven’t saved as much as you would have liked, this gives you the opportunity to make up for lost time.

Good luck and don’t forget- it’s never too late!