Whatever your stage of life, it's never too early or too late to plan for retirement. The fact is, whether you've started or not, small moves can make a big difference in the long run. By investing as much as you can toward your retirement now, your assets can be better poised to generate more earnings in the future. That's thanks to the power of compounding.
When it comes to financial planning of any sort, getting started is the biggest challenge. For better or for worse, finances are already top of mind as we head into tax season. While you're gathering your tax information, grab the momentum and take some time to explore areas of your finances beyond taxable income and returns. Here are steps you should consider now to prepare for retirement down the road.
- Check in. Take a financial health day, and look into both your taxes and retirement needs. Make an appointment to talk about retirement plans and accounts with your financial professional to ensure portfolios can meet retirement goals.
- Consolidate. While you're rounding up income information for tax day, think about 401(k) or 403(b) assets that may exist with a former employer. Instead of letting that money sit longer, evaluate rollover IRAs that may offer more investment choices and greater control of assets than the plan as it was structured under the former employer.
- Find balance. A financial professional can help individuals rebalance investment portfolios, taking into consideration whether anything has changed, including time horizon, objectives or risk tolerance. This will ensure that portfolios and strategies align with long-term plans.
- Review plans and policies. Many estate plans and insurance policies are meant to safeguard an individual's nest egg. Yet many people follow a "set it and forget it" approach. The reality is, changes in employment, family circumstances and property values can happen every year, so it's important to review annually and adjust as necessary.
- Think about yourself. If you are self-employed or a small business owner, specific small business retirement plans can help busy owners and entrepreneurs plan for their financial futures. Research whether a Solo 401k, SEP IPA, SIMPLE IRA or profit-sharing plan may fit your situation.
- Revisit your budget. Review or establish your budget and explore whether you could be putting more toward retirement.
- Match up. If you're not already taking full advantage of an employer 401(k) match, consider using extra funds to get as close to that number as possible. Policies for making changes vary among companies. Check with human resources now and plan changes.
- Catch up. Individuals who are over the age of 50 can take advantage of catch-up contributions to boost their retirement savings. In addition to the $18,000 401(k) maximum, any individual over age 50 by the end of the calendar year can make a $6,000 catch-up contribution to their 401(k). Check out the IRS' website for contribution amounts. If you qualify, consider making plans now to boost your contributions for the year.
By taking small steps to increase savings each year and plan for retirement, individuals can be better positioned when that all-important milestone arrives.