Every so often, I will put on my accountant’s hat and put out a tax tip or financial tip.
***Disclaimer: Before making any tax or financial decisions, please speak to your accountant and financial adviser.
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Cost of living is extremely high in the US especially if we live in California, New York, or Hawaii. Californians and Hawaiians know this to be the monetary cost of year round beautiful weather, beaches, forests, and desserts. New York, well is just awesome because it’s New York.
I’m consistently seeing in my practice people who are unable to retire or do retire and then NEED to take on part time work to make ends meet. Social security plus any retirement savings they do have, just is not enough to live on for an extended amount of time.
It scares me to imagine the next generation also going through this when retirement age comes around.
Please take some time now to review your 401(k) or 403(b) plan, if you have one though your employer. Try to budget in enough room to take full advantage of any possible employer matching contributions.
Example: Say, your employer will match up to 6%, make sure you contribute 6% of your income to your retirement plan to get that added benefit from your employer.
Don’t forget! These contributions are subtracted not only from your wages but from your taxable income for the year, as well. Therefore, instead of this being 6% of your out of pocket income, it may only be 4% or 5% due to less taxes being withheld from your paychecks.
*401(k) and 403(b) employee contribution limits for 2018 = $18,500 for employees under age 50, $19,000 for employees over age 50 (IRS – 401k)
Most plans allow changes throughout the year by logging into your retirement account on their website portal.
No excuses! There is still time to increase your contributions for 2018 as well as plan ahead for 2019.
If you do not have an employer sponsored retirement plan available to you, please look into funding an IRA. IRA’s have special income limitations and rules, so please speak to your accountant and financial adviser before funding an IRA for this year.
IRA contribution limits for 2018 = $5,500 for employees under age 50, $6,500 for employees over age 50 (IRA – IRA)
Please do not let investing in your future and your retirement scare you. Personally, I’d rather tighten my budget a little now than be wanting to retire and be unable to make it happen financially.
Here are a couple great financial and budgeting planners to get you started:
~Kristina is a CPA in Los Angeles, CA USA.
Tell us in the comments how you are putting money away for your retirement years.