- Save to my employer-sponsored retirement plan; and not just save my money, but my employer’s money too. If your company offers a match, take advantage of it.
- Diversify my savings (which will potentially also diversify the tax treatment they get when I withdraw my money in retirement). For example, I will save in my employer-sponsored retirement plan, which is tax-deferred. I won’t get taxed on it now because I’m contributing pre-tax dollars, but I will be taxed on it later when I actually retire and start making withdrawals. In exchange, it reduces my taxable income now. I’ll also save in a Roth IRA where the money I contribute is already taxed, so I won’t be taxed on it later, providing I adhere to IRS rules about withdrawals.
- Save up for emergencies with a liquid account such as a money market account. Nowadays, experts recommend saving six to eight months of your salary to cover unplanned expenses. Start small. Saving just $50 a month can give you a $600 cushion at year end. (Tip: take your lunch to work and put your savings in your liquid account.)
- Reduce expenses by being selective about what I buy. That includes watching our utilities usage and other bills to see where my family can cut back; and reviewing our insurance plans, such as auto and home, and shopping around for less expensive rates.
- Educate myself and my family by reading up on financial topics and taking steps that will help us save more and enable us to invest appropriately for the long term.
What’s your plan for retiring successfully? AC: 0414-7194