Everyone talks of New Year resolutions and plans, but in most cases, those resolutions do not go past spring. However, if the idea is to save more in your retirement savings account, there is a solution to help you make it last.
The secret to saving and save without giving up is efforts. According to Paul Fenner, a financial planner in Commerce Township, Mich, the simplest way to increase your savings is to make it automatic. What does this mean? It means that you have to look for natural and encouraging ideas that will motivate you to save, such as signing up for 401(k) plan if you are yet to. The next step is to decide on the percentage of your base salary that will automatically go to your saving account every pay period.
In 2019, federal employees are allowed to save up to $19,000 in their 401(k), federal Thrift Savings Plan, 403(b) and most of the 457 plans with extra $6,000 contributions which are applicable for workers of at least age 50 years.
If the amount feels too high for you, try and contribute what you can comfortably afford but ensure that it is enough to get your company match if you already have one as recommended by David Geibel, the managing director of Univest Wealth Management, King of Prussia, Pa.
If your retirement savings plans provide an auto-escalation aspect, of which most employer plans do, it will allow you to increase your contribution amount every year on a fixed rate without tampering. You may not even notice the difference in the paycheck since the escalation rate is mostly a small percentage per month, but annually, the little increment will boost your overall contributions.
If you are yet to join the 401k) or maybe it is not accessible at work, you can set up an IRA at any brokerage firm. In this case, some funds from your paycheck will automatically be transferred to the IRA account. 2019 is an excellent year for the savers as IRS increased the contributions limit for IRAs from $5,500 to $6,000, which happens to be the first increment since 2013. There is also an extra $1,000 for savers who are at least 50years old. The IRA opening process will not take you more than 15 minutes, and the best part is that you get to do online.
The self-employed individuals are eligible to open up a SEP IRA, and they can contribute up to $56,000 in 2019.
From these, you can tell how easy it is to save with the automated retirement savings plan. It is more of a subscription service, and in the end, you will love the results during your retirement age.