Maximizing your Retirement Savings and Insurance Benefits is crucial to a comfortable retirement. Whether planning to retire early or stay put for decades, you can maximize your savings in many ways.
The first step is assessing your current savings and investment portfolios to ensure they meet your financial goals and risk tolerance. Then, you can decide which investments are best for your situation.
Maximize Your Employer Match
Taking advantage of your employer’s matching contribution to your 401(k) plan is one of the best ways to boost your retirement savings. Not only does this make you feel good about saving for your future, but it also helps lower your taxable income and increase your take-home pay.
Employers typically offer partial matching, meaning they will place a certain percentage of your contributions into your retirement account. They can match 2%, 4% or even 6% of your base salary.
However, you should save beyond the match. That’s because compound interest will help grow the amount you save over time, even if it’s not as much as your employer’s match.
In addition to partial matches, many employers also offer a dollar-for-dollar game. Your employer will place a dollar into your account for every dollar you contribute, up to a set amount.
Maximize Your Catch-Up Contributions
Catch-up contributions can help you save more money in retirement, especially if you haven’t been saving as much as you should in the past.
If you have a 401(k) or another employer-sponsored plan, these contributions are made through deductions from your paycheck. Maximizing your retirement and insurance benefits is essential for any employer match.
A good rule of thumb is to set aside 15% of your salary in retirement savings. This amount will allow you to retire comfortably and have enough to live on in later years.
You may need more than that, depending on your income and lifestyle, to reach your retirement goals. Check with your financial advisor to see how much you need to save and how to do it most effectively.
One way to maximize your catch-up contributions is to pay down high-cost debt first, such as credit card balances and student loans. These debts will compound much higher than your savings accounts’ investment growth, so paying them off sooner is crucial.
Maximize Your IRA Contributions
One of the best things you can do to maximize your retirement savings is to contribute as much money as possible to tax-advantaged accounts, such as an IRA. These accounts allow you to invest your money long-term and enjoy the benefit of tax-advantaged compound interest over time.
When you make IRA contributions, choosing investments that will provide growth and income in the years ahead is essential. But you should still pay attention to your other financial goals while putting away funds for retirement.
Instead of throwing money into an IRA, you can take it to the next level by making regular, automatic monthly deposits. By doing so, you’re likely to be more disciplined about your finances in the long run, and you’ll be able to balance volatility in your portfolio better.
You can also accelerate your IRA contributions by making quarterly or monthly payments to your brokerage. That way, you can get a jump start on the compounding effects of investment over the year. Similarly, you can transfer windfalls such as bonuses or winnings to an IRA.
Maximize Your Annuities
Annuities provide a guaranteed stream of income that can help you cover your retirement expenses and supplement Social Security. They also accumulate tax-deferred1 and do not have contribution limits like 401(k)s or IRAs so that they can be essential to an essential part of a comprehensive financial plan.
There are various types of annuities, and each one can have different benefits depending on your goals. Fixed annuities are the most common type of annuity and offer a fixed interest rate that you can count on for a specific period.
Another popular type of annuity is the variable annuity, which can be more flexible than a fixed annuity. It can offer a more excellent range of investments, which can help you build up your savings and keep up with inflation.
Choosing the right annuity is critical to achieving your long-term financial goals. The best way to determine proper assistance is to speak with a professional.
Maximize Your Health Insurance
Health insurance is one of the most critical parts of a healthy financial plan, providing essential benefits to cover routine checkups and preventative care and help you manage medical costs. However, many people may need to take full advantage of their plans to maximize coverage and lower out-of-pocket expenses.
The best way to avoid this is to ensure you and your family are covered by the right insurance policy for your needs. You also want to take advantage of wellness programs offered by your insurance provider, which can help you stay healthy and reduce the risk of chronic illnesses that cause high healthcare costs.
Depending on your employer, you can also contribute to an HSA (health savings account) or FSA (flexible spending account), which can be used for out-of-pocket medical expenses tax-free. You can also use these accounts to save for deductibles and other health care needs, including dental, eye and vision care.
You must save 15% of your yearly pre-tax income to ensure you have enough money to retire. This can be hard to do when you’re young, but it is possible.