The 3 Best Retirement Tips Of 2013
Posted on February 5, 2013 at 3:00 pm
(Forbes) Retirement planning should be on everyone’s mind, whether you are a baby boomer reaching the end of your working life or a 20-something just starting out. One of the smartest financial advisors gives us her take on how to do this: Manisha Thakor is the CEO and founder of MoneyZenManagement in Santa Fe, N.M. – an independent boutique advisory firm focusing on the needs of high net worth women and families. Her suggestions:
As we ease into the new year, we also welcome some changes that make it easier to retire with a solid nest egg.
Here are three simple steps that you can take in 2013 to maximize your retirement savings.
1) Take advantage of higher workplace retirement plan contribution limits.
In 2013, you are allowed to contribute $500 more to 401(k) and 403(b) plans than in 2012, bringing your total maximum possible annual contribution to $17,500, if you are under 50 years old.
Doesn’t sound like a big deal? If you are 25 and you save an extra $500 annually until you are 70, that extra $500 a year is worth $142,000, assuming an average annual return of 7% over that time.
If you are over 50, the government allows you to contribute even more. You can save an extra $5,500 on top of the new $17,500 limits, bringing your maximum annual workplace contribution to $23,000. The over-50 limit stays the same for 2013. This extra contribution applies to federal employees’ Thrift Savings Plans – as well as to private-sector 401(k)s, which are for profit-oriented companies, and 403(b)s, for nonprofits.
Despite their less-than-friendly sounding names, referring to sections of the U.S. tax code, these programs are your friends. Payroll deduction helps you save because, when a recurring sum automatically comes right out of your paycheck, you don’t have to consciously put the money away.
These programs also have two turbo-powered functions that can work in your favor: matching contributions from your employer (although not all companies make them) and the tax-deferral on your contribution – the money gets withdrawn from your salary before taxes, and you are taxed only when you take it out later. READ MORE
What are your thoughts?We want to hear from YOU! Go to our TAKE ACTION page and record your own story on your webcam, or leave us your comments, below!