As time goes by, you get closer to retirement. But what financial security have you put in place as part of your retirement plan? Research shows that only 50% of Americans have financial goals to save for retirement. And with an average of 20 years in retirement, it is proper to start preparing for retirement as early as today. It would be best to adjust your lifestyle to invest to maximize your retirement savings. Below are excellent ways you can consider maximizing your retirement in 2022.
1. Contribute to 401(k) Retirement Plan
A 401(k) is an employer-sponsored savings and retirement plan for employees. You can maximize your retirement by contributing to the savings plan and, most importantly, ensure you meet your employer's match. If your company provides a matching contribution, you should increase your savings to get the free money.
Contributing to the account will reduce your total taxable income, likely reducing your tax bill. Besides, the savings will earn compound interest over the years of saving, so the earlier you start contributing to the plan, the better. The contribution is deductible from your paycheck, making it an effortless retirement-saving method.
2. Contribute to an Individual Retirement Account (IRA)
Opening and contributing to an IRA are one of the best ways to increase your savings, which you can invest or use once you retire. It is easy to start contributing to your IRA plan. IRA contributions or savings are deductible when filing taxes for persons 50 years or older. As such, it will lower your taxable income and will likely reduce what you owe the IRS in the end.
Your IRA has many benefits, such as offering you hundreds of savings and investing options like trust funds, bond funds, stocks, and more. Therefore, you can tailor your wealth and holdings to align with your risk tolerance, monetary needs, and life goals.
3. Make Catch-up Contributions (For Individuals Aged 50 or Older)
Yearly contributions to IRA and 401(k) are limited to specific amounts. However, individuals aged fifty and older can contribute to their annual savings. It will enable you to contribute more to your savings account than you would have saved before.
For instance, in 2022, individuals under fifty years old may save up to $20,500 for their 401(k) account and $6,000 for an IRA. On the other hand, if you are fifty years or older, you can save up to $27,000 and $7,000 to 401(k) and Individual Retirement Account (IRS), respectively.
4. Check Your Spending and Stash Extra Money
You may have savings accounts, but if you don't check your expenses and spending, you may not have enough money to save for retirement in 2022. You need to adjust your lifestyle by reducing unnecessary costs. You may minimize road trips, renegotiate your automobile insurance, shop smarter, use less energy and find cheaper ways to keep fit and have fun. It will help you have more to invest or save for your retirement plan.
Do you have extra money from bonuses, salary increments or tax refunds? Please don't spend all of it on a new designer outfit or vacation. Treat yourself with something small and stash the rest in your savings or retirement accounts. It will ensure you make more significant strides towards maximizing your retirement savings.
Maximizing your retirement in 2022 is a great way to secure a better life after retirement. You should save more and remain focused on achieving your retirement goals. Besides, it would be best to focus on protecting your assets and planning for the future if you are not there. At Caldwell Trust, we offer estate planning, retirement planning, and investment management services. Contact us today to help you maximize your retirement in 2022 and plan for the future.