Category: Retirement

Do you ever wish you could find extra money for your child’s college expenses or retirement? Maybe you would like to take a bucket list vacation or buy a larger home. Whatever your financial goals, finding the money to help pursue them can be challenging but not impossible. Here are some ways to find more money:

Retirement investors typically pay attention to whether their contributions are deductible or not. There are a wide variety of investment accounts, from 401(k) and 403(b) plans, that offer this benefit regardless of income.

For high-net-worth individuals, limits to how much they can contribute to these plans may leave them looking for another place to put additional monies. A Roth IRA, which doesn’t offer deductible contributions but does feature tax-free qualified distributions. However, high net worth individuals often get shut out of investing in a Roth IRA due to income restrictions. If this describes you, look into a non-deductible traditional IRA. Additionally, the percentage of your contributions to investment gain also won’t be taxed when you begin distributions.

There are other alternatives, including taxable investments and potentially qualifying for the Roth in some years by shifting income, so talk to your financial and tax professionals to see what option is best for you.

One simple move can lower your tax bill and increase your retirement savings. Contributing to an eligible retirement account by the April 15, 2025 income-tax deadline will reduce your 2024 taxable income by the amount you contribute.

INDIVIDUAL RETIREMENT ACCOUNT (IRA)

An IRA offers you the flexibility to choose various investments to hold in your account. For 2024 and 2025, you can contribute up to $7,000 to an IRA—$8,000 if you’re age 50 or older. You must have “earned income,” including money from wages, salaries, tips, bonuses, commissions, or self-employment, to contribute to an IRA. Your spouse can contribute to an IRA as well.

SIMPLE IRA

A Savings Incentive Match Plan for Employees, or SIMPLE IRA, is a retirement savings plan designed for small businesses with 100 or fewer employees.

Employers must match employee contributions dollar for dollar—up to 3% of an employee’s compensation—or make a fixed 2% contribution for all eligible employees, even if an employee chooses not to contribute.

As with a traditional IRA, you can contribute to a SIMPLE IRA until April 15, following the end of the tax year, and benefit from the tax deduction.

SOLO 401(K)

Solo 401(k) plans are designed to cover a business owner with no employees and his or her spouse. You can make elective deferrals of up to 100% of your earned income, or the annual contribution limit, plus employer nonelective contributions of up to 25% of compensation.

Contributions can be made until the company’s tax return deadline, including extensions.

Financial and tax professionals can help you determine which plan is right for you.

Few people would argue about the wisdom of putting money away for retirement. Yet, many of us either don’t start, take time off from contributing, or abandon this strategy altogether when financial obstacles hit. However, most people can revive their retirement savings strategy at almost any age by making a few changes in how they deal with money.

THAT’S LIFE

We may know that time and compounding make a powerful combination, but we often let other financial obstacles get in the way of saving. We buy first homes, have children, pay for their education, deal with parents’ long-term care, and more, so we put retirement savings on the back burner. So, let’s say you let some time slip by. While it’s difficult to catch up, every little bit helps.

For starters, consolidate your retirement plan assets if you have contributed to savings plans at previous jobs. Roll funds into an IRA or your current employer’s plan, if allowed. You’ll benefit from the ease of having all your retirement assets in one place with potentially lower overall fees.

Also, take advantage of your plan’s automatic tools, including automatic contributions, rebalancing, and escalation. The latter feature increases your contribution when you earn a pay increase.

MORE MONEY

If you have a 401(k) plan, know that IRS contribution limits are generous. Effective in the 2025 tax year, active 401(k) participants who attain age 60 and are at least age 63 by the end of the calendar year can contribute the greater of $10,000 or 150% of the catchup contribution. Consider opening a traditional IRA, which may help you put away a little more tax-deferred money for the future.

Looking for extra money to put toward retirement? Find more money to invest by cutting back on expenses like dining out. Consider gigging to earn extra cash in addition to your primary income. And think about delaying retirement because even a couple of years of extra contributions and potential growth can make a difference.

Talk to your tax professional to learn about these and other ways to help get your retirement savings back on track.

72% of female gray retirees didn’t view their engagement ring as a financial asset nor realize selling it could give them cash to invest and supplement their retirement savings.

_{*Building a Financial Fresh Start, Worthy.com}

Just as you allocate assets to a combination of stocks, bonds, cash, and other investments, you may want to consider allocating retirement assets among tax-deferred, tax-free, and taxable accounts for a potentially greater retirement income.

FIRST TAKE ADVANTAGE OF TAX DEFERRAL

Like many Americans, you probably have most of your retirement savings in a traditional 401(k) or similar tax-deferred retirement plan. The benefits of tax-deferred plans have been proven time and time again. You save federal and possibly state income tax while contributing, and your contributions grow tax-deferred until you withdraw them at retirement when many people expect to be in a lower tax bracket.

But that’s the sticking point. If you’ve been successful in business, at retirement time, you may find that you aren’t in a lower tax bracket than you were when you were working. You could lose some of that tax-deferral advantage.

ADD TAX-FREE ACCOUNTS

With Roth 401(k) accounts and IRAs, you invest with after-tax dollars and gain no current tax benefit, but you’ll owe no income or capital gains tax on any withdrawals you make during retirement. Another tax-free vehicles to consider is municipal bonds, which offer income free from federal income tax and state income tax if they are issued in the state where you reside. However, the interest earned may be lower than possible with Roth accounts.

AND A DASH OF TAXABLE ACCOUNTS

Taxable accounts offer a wide range of investment choices, including stocks, bonds, mutual funds, and real estate. They also require you to invest with after-tax dollars and pay taxes every year on any income you earn or capital gains you realize.

As the old TV commercial said, “It’s not what you make, it’s what you keep.” Tax diversification can spell the difference between having income choices or having taxes force you to downgrade your lifestyle. Note: Tax diversification isn’t a DIY strategy. It requires a thorough understanding of tax codes and your overall financial situation.

There’s no better time than the beginning of a new year to review your retirement plan and, if possible, increase your contribution to the maximum allowed, if possible.

PRIORITIZE PLANS

Start by maximizing contributions to your business’s 401(k) or other company retirement savings plan.

Next up: IRA contributions, if you’re eligible. Start with traditional tax-deferred contributions. Then contribute to a Roth IRA. Mind income limits for IRA participation.

Consider a regular taxable brokerage account once you’ve exhausted tax-advantaged retirement accounts. You’ll have the flexibility to use those retirement funds whenever and however you choose.

CATCH-UP CONTRIBUTIONS

If you’re 50 or older, make catch-up contributions, if possible. An additional incentive to make maximum tax-deferred catch-up contributions to 401(k) Roth accounts in 2024 and 2025: The IRS delayed the SECURE 2.0 Act provision that prevents individuals earning over $145,000 from making pre-tax catch-up contributions to Roth 401(k) accounts until 2026.

This reprieve also gives you, as an employer, more time to implement the Roth 401(k) catch-up change and inform employees about this upcoming change.

Retirement is not a single event. It is a process that begins long before you leave work and continues for the rest of your life. Here are some tips on how to transition into retirement and beyond.

CONSOLIDATE AND SIMPLIFY

Consolidate your retirement accounts for simplicity. Combining accounts makes managing your money and seeing the big picture easier.

Fewer accounts mean fewer monthly or quarterly statements, fewer companies to notify if you move or want to change beneficiaries, and possibly lower costs. It can also make calculating RMDs easier.

EXAMINE THE NUMBERS

As you move away from working full-time, be sure your monthly and annual budgets are up to date. Include existing expenses that aren’t likely to change, such as groceries and utility bills.

Don’t forget to include new expenses you may incur in retirement. This includes healthcare costs your employer may have paid for or taxes when you withdraw from tax-deferred retirement accounts.

UPDATE YOUR PLANS

If it’s been a while since you’ve reviewed your estate planning documents, nearing retirement is a good time for a refresher.

While you may focus on ensuring your will and trust documents are up to date, don’t forget about your power of attorney, health care directives and guardian nominations.

If your retirement plans include relocating to a new state, consult an attorney in the new location to ensure your estate documents will be valid in that state. Having out-of-state documents can complicate trust and estate adminstration.

When you update your estate plan, remember to create a list of your accounts and assets and update that list as things change. It is not important to add a value to the account, as those change over time. Make sure to include the name and location of the account and the last four digits of the account number. It is one of the most important things you can do for your beneficiaries to avoid a time-consuming treasure hunt for your assets when you’re gone.