Aggressively saving for retirement can be a great way to prepare for the future. The money you invest right now can add up to a comfortable lifestyle in the future. There are a variety of financial planning strategies you can use to set money aside for retirement, such as an employer-sponsored 401(k).
Did you know that these retirement accounts usually have annual contribution limitations put in place by the IRS? If you want to be more proactive about saving for retirement and you are reaching the annual limits, then there are a few other types of retirement savings strategies you might consider. At this point, it is smart to talk to a financial advisor for comprehensive financial and retirement planning.
Here are a few solutions that can be included in your retirement plan:
Individual Retirement Account (IRA)
This retirement savings tool is an excellent supplement to use, helping you leverage tax benefits now and in the future. If you use a traditional IRA account, it means that you do not have to pay taxes on the contributions. Instead, the qualified withdrawals during retirement will be taxed.
Another option is a Roth IRA, which is a great tool if you need another way to invest your after-tax earnings. The benefit of this type of IRA account is that you do not have to pay taxes when you are withdrawing money in retirement.
Health Savings Account
These financial accounts are created to help people save for medical care, but they may also be used as part of a retirement strategy. Money that you put into an HSA is tax-deductible, and you do not have to pay taxes when the distributions are used for qualified health care expenses.
If you are using a high deductible insurance plan, then a health savings account goes hand-in-hand with your insurance. You are saving money on insurance premiums and can put that cash into an HSA instead. The funds will sit in the account until you need to use them for health care costs. Or you can start making non-healthcare withdrawals after the age of 65.
Other Investment Accounts
Once you have maximized your tax benefit accounts, including 401(k), HSA, and IRA, then it is time to look at other investments for your after-tax dollars. These accounts are not limited by annual contributions restrictions, but it is smart to work with a financial advisor and accountant since you will need to manage capital gains tax.
Our team at Bulman Wealth Group provides personalized, comprehensive planning for people of all ages and can partner you with a trusted accountant. Contact us to schedule a consultation so you can learn more about strategies for the best retirement planning for your unique financial situation.
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