Saving for retirement is a great start. These strategies could help you save even more.
Regardless of your age or financial know-how, planning for retirement is a necessary venture. There are many things to consider, such as estimating how much money you will need during retirement; planning for changes in lifestyle, health and retirement; planning for changes in lifestyle and health; inflation; and other factors that may exist years beyond the present day.
Because of this, many Americans are unsure of the best ways to save, or they’re hesitant to retire even if they do have a nest egg. But with proper research and planning, it is possible to beef up your savings, so you have more to work with in your golden years. Here are a few retirement-related issues to consider:
Do you still have student debt?
The perception of the demographic affected by student loan debt is out of date: Significant college debt is no longer an issue only for young and middle-aged Americans. In fact, people 60 and older are racking up billions in student loan debt, and that number is expected to grow as young Americans carry their debt further into their futures. With that in mind, folks should try to understand the best ways to approach student debt at any age if they want to optimize their retirement savings.
Many loan servicers automatically enter borrowers into a repayment plan in which costs start low and increase gradually, in anticipation of a recent graduate starting with a lower salary and slowly increasing their income. This makes sense for younger borrowers; however, for borrowers close to retirement age, it may work better to find an alternate route that’s a better fit for their predicted future income and needs.
Can you downsize now to reduce stress later?
Downsizing works at any age to start beefing up retirement savings. Younger people may want to adhere to the following rules of thumb: Try to spend money on the things that matter most to you, and practice frugality on things that don’t enrich your life or support future growth. When making a purchase, ask yourself, “Is this a need or a want?” Consider things in the want category carefully and decide if the money is better spent or saved.
What’s your retirement destination?
Not all places are created equal when it comes to retiring. Retirees face choices such as location of family members, optimal weather, housing costs and availability of health services. In addition to those personal choices, some states have more-enticing tax codes than others for retirees.
States like Texas, for instance, don’t have a personal income tax, so those particular states won’t be taking a big bite out of the income from your 401(k), IRA, pension or Social Security benefits.
Are your accounts in order?
Many companies offer 401(k) accounts, which allow you to invest money pre-tax. That means you may not have to pay taxes* on that money until you withdraw it in retirement. Some employers will sweeten the deal by matching your contributions up to a certain percentage.
You can also choose to open an IRA. This option could be especially appealing to younger people because of the penalty-free withdrawal option for first-time homebuyers. Traditional IRAs and Roth IRAs may also have tax benefits for retirees.*
It’s never too soon or too late to think about beefing up your retirement savings. Call 325-674-1885 or visit First Bank Texas to start planning your financial goals.
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*First Baird Bancshares and its subsidiaries, including First Bank Texas, do not provide tax, legal or accounting advice. The information here is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers before engaging in any transaction.
Members of the editorial and news staff of the USA Today Network were not involved in the creation of this content.
By Violet Bauske
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