The key to a comfortable retirement is to think ahead and to have enough money saved up in your retirement savings account. However, you may have fallen behind on your savings and need a boost to get you on the right track. There are some ways to accelerate your retirement savings if that’s the case. A financial advisor can help ensure you’re optimizing your savings strategy, and you can use a free financial advisor matching tool to help you find one.
Maximize Your Contributions
You can contribute up to $19,500 a year in your 401k. If you are 50 and older you can contribute even more, an additional $6,500. This is call the catch up contributions, which brings the total 401k contribution limits to $26,000 for those 50 and older. By contributing the maximum amount allowed, you can increase your long term investment potential.
If that is not possible, consider increasing your monthly contributions to whatever amount you can. If you get a bonus or pay raise, consider increasing your monthly saving rate.
Take Advantage of Your Employer Match
In addition to the maximum contribution of $19500 you can make to your 401k, your employer also contributes. In some cases, they match dollar for dollar or 50 cents for each dollar the worker pays in.
Adjust Your Investment Mix
The more time you have before retirement, the more time you have to invest. If you are many years away from retiring, you should invest more aggressively in stocks rather than bonds. In other words, the majority of your assets should be in growth investments. As you’re approaching retirement, you can re-balance your portfolio to a more conservative investment mix.
Keep in mind that the more aggressive your investment mix is the riskier it is. That is, you may lose money in a declining market. That is why it is always important to speak with a financial professional to help you build a well balanced investment portfolio.
Consider Investing in Other Retirement Accounts
If you’ve maxed out your 401k account, consider investing in an Individual Retirement Account (IRA), such as a Roth IRA or traditional IRA. An IRA is another tax-advantaged retirement account where your money grows tax free until you take it out.
You may contribute $6,000 into your IRA for the year of 2020. If you are 50 years old and older, you may contribute up to $7,000.
Both wife and husband can contribute up to $6,000 each year, making it a total of $12,000 even if only one spouse is working. Your can deduct all of your traditional IRA contributions every year.
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You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.