Gone are the days when it was possible to live off of your pension and a little bit of savings. Today, to be able to live a decent life after retirement, you must save 30-40 percent more than the estimated outlay. Government-funded savings accounts and low-risk investment strategies are two ways to make sure you stay happy and prosperous until your last breath.
Here Are the Best Ways to Save for Retirement in 2019
1) Contribute to your 401(k)
A 401(k) is a tax-qualified government-aided retirement plan in the United States. Under this plan, you and your employer (if you are lucky) can contribute a certain amount from your monthly salary. The best part is, the money you save in the 401(k) is tax-deductible. This plan is formulated for a hard-working middle or lower-middle-class person who wishes to save a decent amount for his/her twilight days. You can withdraw your 401(k) savings–without any penalty– after the age of 59.
2) Invest in an IRA
IRA(Individual Retirement Arrangement) is also known simply as “Account” by old-school people. Like the 401(k), IRA also a tax-advantaged account, although not regulated by your employer. IRA offers you total control of your account, you get to decide what percentage of your monthly income to invest in it. This is the only difference between a 401(k) and IRA. Another good news, you can have both 401(k) and IRA simultaneously.
3) Claim tax credit and deductions
Laws concerning tax credit and deductions are updated every year. With every passing year, the US government makes it easy for an average joe to file taxes and claim tax reliefs. Hence, before filing your taxes–if you do it by yourself– It is important to once glance over the tax benefits section on the official website of the United States government. Ideally, it is best to hire an accountant for your tax-related work.
4) Always stay insured
Insurance is the best way to manage risks associated with owning a particular asset. You don’t want to purchase a brand new car and lose all the money because of damages caused by a flood or a silly road accident. When you buy insurance for a particular asset, you make sure that, in no circumstance, you will lose your investment.
5) Automate your savings
If you haven’t already, you should start saving and investing your hard-earned money in profit-rich and low-risk assets. And don’t worry, you don’t need to hire a superstar financial advisor or even an accountant. With the advent of financial software technology, it is now possible to automate your savings and investment accounts at the tip of your fingers.
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I know some savings accounts are on the verge of becoming redundant. But the good old 401(k) and IRA will always support the lower and middle-class citizens. When you have saved enough in tried and trusted retirement accounts, only then you can afford to go out on a limb and invest in real estate, stocks, and bonds.