Retirement planning is all about the future, your future. Whether you are classified as a millennial, Gen Xers, women, or you are in your 40s-50s, retirement planning is a must. The key to successful retirement planning is starting young because it gives you more time to work towards your retirement goals. There are some keys to successful planning for those who have an employer and for business owners who wish to maintain their lifestyle after retirement.
1. Take Full Advantage of Matching Funds
While most of us do not have a pension plan we can depend on when we retire, one new benefit many have is matching funds offered by employers. These funds are dependent on your company retirement plans policy regarding matching funds. The sooner you start taking full advantage of matching funds, the better a cushion you will have after retirement.
2. Use the Retirement Savings Credit
For those who are eligible for the retirement savings credit on their taxes, take this credit annually. This credit is available for many lower income earners and helps encourage you to save for retirement by offering a credit of up to $1,000 for single taxpayers and up to $2,000 for joint filers. These credits reduce the amount of income tax owed which allows you to invest in your retirement.
3. Maximize Your Health Savings Account
Your health savings account (HSA) can help you pay medical bills while you are working. However, thanks to the ability to maximize your donations while working, these funds can also be used during retirement to help you maintain your lifestyle. If you contribute the maximum amount annually, you can use these funds tax-free to pay out-of-pocket medical expenses after retirement.
4. Automate Retirement Savings
The best intentions often get sidetracked when it comes to saving for retirement. The sooner you have funds automatically sent from your pay to your retirement account, the better you will be later. Automatic withdrawals to your company-sponsored plan and automatic deposits on a regular basis to your non-employer based plans will help ensure you get a good start managing your retirement planning goals.
5. Know Your Risk Threshold
Retirement planning at all ages involves savvy investing. While you are young, you should consider investing in a higher-risk portfolio. Taking some risk may allow you to increase your retirement nest egg. The older you get, the less risk you should be taking so that as you approach retirement, your portfolio is more stable.
6. Remain Aware of Contribution Limits
One of the benefits of being in your 50s is there are options for increasing your contribution limits for your IRA plan. Catch up contributions can help you put more money into your retirement plan while you are still working. Make sure you are taking full advantage to help you develop a safety net for after retirement.
While many of these tips are more useful for those who have income from an employer, many of them apply to those who are self-employed. As a business owner, you are entitled to many of the same benefits. Maximize your contributions to your business plan, or set up a Solo 401(k) plan, and start saving for your retirement today. The sooner you start planning, the better the likelihood you can maintain your lifestyle after retirement.
 Retirement Savings Credit: https://www.irs.gov/taxtopics/tc610
 Health Savings Accounts (HSA): https://www.irs.gov/publications/p969
 IRA Contribution limits: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
 One Person 401(k) plans: https://www.irs.gov/retirement-plans/one-participant-401k-plans