Retirement Savings Planning Checklist for 2019
Saving for retirement can be the best way to build your wealth, especially through a workplace 401(k) account, since you can put the money away before taxes to grow tax-free until you have to withdraw the money. Most importantly, you save the money before you have a chance to spend it. I call that "hiding the money from yourself" and it really works! If you don't already have a plan, put retirement savings planning on the top of your to do list for 2019!
Here are some ideas for boosting your retirement savings for 2019:
Max out your 401(k) contribution at work ($19,000 in 2019 and if you are over 50 you can contribute an additional $6,000 for a total of $25,000); if you can't do that, at least contribute as much as you need to get the employer match and then each year when you get a raise use a portion of that to increase your contribution until you max out.
Contribute to a Roth IRA the maximum amount each year ($6,000 in 2019 and if you are over 50 you can contribute an additional $1,000 for a total of $7,000) - although the contributions to a Roth are not deductible against income, the Roth IRA has several advantages over the traditional IRA including tax free withdrawals and no minimum required withdrawals when you reach age 70 1/2; a Roth can be a nice estate planning tool, although there are income limitations.
If you can't contribute to a Roth IRA because you earn too much ($137,000 single and $203,000 married in 2019), contribute to a traditional IRA instead and convert to a Roth IRA later (called a "backdoor" conversion); the annual contribution limits are the same for traditional IRA and Roth IRA and if you are not able to deduct the traditional IRA contributions, that will reduce the tax liability on the Roth conversion significantly - this can get fairly complicated so always check with your tax adviser.
Setup a whole life insurance policy or if you have a convertible term life policy, convert it to a whole life policy; the cash surrender value of the policy will build up over time and can be tapped for potentially tax free retirement income through insurance policy loans, and unlike 401(k) and traditional IRA accounts, does not require a minimum annual distribution once you reach 70 1/2, so this can also be a nice estate planning tool (see my prior post on this subject here)
Make sure you have plenty of cash saved for emergencies, so you don't have to liquidate your investments before you are ready to!
Hope this helps you develop your own plan for preparing for your retirement. Don't delay, start now!
For more investing ideas, click here.
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