When it comes to retirement planning advice, there’s plenty out there. We definitely recommend that you work with an experienced financial planner, rather than winging it with advice you’ve read on the internet. However, there is one common rule that you’ve probably read multiple times, and we can say it’s great advice for almost everyone: Max out your retirement plan contributions every year!
The reasons for this common rule are twofold. First, no one has ever complained that they saved too much for retirement. So if you have access to a retirement plan, use it to its full advantage! Plus, tax-advantaged retirement plans, such as the 401(k), actually help you to reduce your taxable income for the year. So contributing as much as possible to your retirement plan can also save you money on income taxes this year.
But what if you’re already taking these steps? We’re glad to hear it, because that means you’re well on your way to a stronger position once you reach retirement. But because you can’t save too much for the future, you might be wondering what else you can do, once you’ve maxed out your retirement plan contributions each year.
Luckily, you do have other options to save for retirement. If you’re already contributing the maximum allowed amounts, consider these other possibilities:
- Make additional catch-up contributions once you reach age 50 (an extra $6,500 per year, currently)
- Open and fund an Individual Retirement Account (IRA)
- Open and fund a Spousal IRA
- Stash money in a health savings account (if you participate in a high-deductible healthcare plan)
- Consider other investments, like municipal bonds, annuities, real estate, or cash-value life insurance policies
Of course, with financial planning there are always various risks which might apply to your situation. So don’t take the above measures without discussing their various merits and drawbacks with a financial planner. Call our office to schedule an appointment, and we can help you continue to prepare for your retirement.