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Day after day, your ideal retirement date draws ever closer – but are you any closer to being truly prepared? Well before that time comes, you need to build a solid foundation to keep your finances in check, so you can retire on time. Thankfully, you can start perfecting your plans with these four ways to set yourself up well for retirement.
Any debt you have hanging over your head by the time you retire will feel like an enormous burden. To keep debt from cramping your lifestyle in the golden years, kick it to the curb with an aggressive payoff schedule. If the balances feel insurmountable, and your interest rates are too high, consider consolidating your debts using a personal loan. Once you have all debt paid off, switch to a cash only approach to keep from racking up high balances. You can divert the funds you spent on credit card minimums into savings to cover big purchases in the future.
Whenever you receive dividend payments from your investments, you should reinvest those funds to build a bigger nest egg. This allows you to increase the value of your investment portfolio and accelerate the growth of the funds you have for retirement. You will need to decide if you want to automatically reinvest the dividends or use the cash you receive to purchase new stocks for your portfolio.
You can build your health savings account balances to cover your medical and dental expenses in retirement. With an individual plan, you can put up to $3,350 a year into the account, while family plans have an annual max contribution limit of $6,750. You have until you are 65 years old to add to this account and the money can never disappear. Build up your HSA balance to ensure you have tax-free funds to use for all your healthcare needs after retiring.
If you are only using a 401(k) account to save for retirement, you can greatly accelerate your savings with a traditional or Roth IRA. With one of these accounts, you can save an additional $6,000 a year, or $7,000 if you are over 50 years old, toward retirement. You may face tax deduction restrictions, however, depending on your filing status and income level. To determine your eligibility and find the right savings level for your finances, consider partnering with a skilled financial advisor at We Florida Financial.
When you follow the steps above, you can create the financial foundation you need to thrive in your retirement years. With the right approach, you will see your efforts greatly pay off as your finances come into line well before your ideal retirement date.