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Putting aside savings is can be complex and requires dedication. One of the easiest ways to get your retirement savings on track is by opening up a Traditional IRA or Roth IRA. Investing in an IRA account is a great way of diversifying your retirement portfolio because of its excellent tax advantages and interest rates. It is also another way of allocating your assets if you decide to invest in stocks, mutual funds, or real estate. If you think that social security benefits will see you through, you may be in for a rude awakening. Given this reality, why do so many retirees make poor retirement planning efforts and have so little accumulated to contribute to retirement? Saving money is requires sound planning and steady commitment. Even if you’re struggling to find money to put away for retirement, there remain effective ways to protect your future.
Tax Refunds as a Source of Retirement Savings
Most people get a refund of some sort from the federal government. It might not be a “whopper” of a check, but it’s money nonetheless. Rather than taking that money and spending it on something not totally necessary, put it into a retirement account. Putting your tax refund into an IRA makes a great deal of financial sense, and you can (and probably should) have one even if you have a 401(k) with your employer.
Employer Matching on Your 401(k) Contributions
If you have access to a 401(k) plan with your employer, make use of it. This is an automated way to start saving for retirement, and because you never actually have that money in hand, you can’t spend it. This is the best way to ensure that you’re socking away funds for retirement without worrying that it will be put to some other use. You should also make sure that you’re taking advantage of any employer contribution matching programs available to you – that can often double the money being put into your retirement fund without an additional cost to you.
Your Home as a Source of Retirement Savings
Real estate might not seem like the soundest investment, but as the recession continues to abate, it’s becoming a wiser move. However, it’s always been a smart decision for those planning for the future – like your retirement. Buy a home, hold onto it, and then pay it off. Once it’s paid off, sell it for a profit and reap the tax-advantaged benefits. Those benefits can be put to work on behalf of your retirement planning. Selling your home to downsize during your retirement years ensures that you have a decent chunk to put into savings while still having the money to purchase a new home.
Professional Tax Preparation for Retirement Planning
Yes, you’ll pay for a professional to do your taxes. However, the money you save will more than offset that cost and still leave you with a large enough return that you can spend part of it and put the other portion into your IRA. Professional tax planning can help you take advantage of all the deductions for which you’re eligible, including some that you may never have heard of. This applies doubly to anyone who is self-employed and works with their home as their primary place of business.
Finding money for retirement can be a challenge. Most Americans barely make enough to pay their bills plus their taxes and Social Security. However, with a bit of smart planning, you can begin socking away money you didn’t realize you had into your IRA.