How do you imagine your retirement years? Will you do something big like travel the world, or are you worried about not having enough cash later in life? It is never too late to think about your future.
The best way to prepare for retirement is to start saving money in a retirement fund. Depending on the type of account you choose, you can even save money on your taxes with contributions deductions. Find out more about retirement savings and how to maximize your money.
There is no better day to start saving for tomorrow than today. The sooner you start saving for your retirement, the more it will have by retirement age. You will have more time to contribute to it, but your investments will have more time to grow.
If your employer sponsors a retirement plan for workers, you should take advantage of it. Many organizations match your contributions to your 401k, sometimes doubling your investment. If your employer does 100 percent matching, each dollar you put into your 401(k) is really $2.
The most significant benefit of a 401(k) is the amount you can save is three times the amount of other retirement account types. You can save $19,500 annually if you are younger than 50 years of age or $26,000 if you are older.
You could save up to $39,000 each year if you contribute $19,500 and your employer does 100 percent matching. However, most employers do 50 percent or less matching and have limits of around 3 percent of your annual income.
A plan administrator picks the plan’s investments from a small selection, and you have little to no control. Your employer will automatically deduct the amount you want to contribute from your paycheck, and your distributions are taxed as income.
But what if you want to save more? Or, what if your employer does not offer a retirement plan or you work for yourself? Another type of retirement account helps you save whether you have a 401(k) or not.