In early 2020, 61% of U.S. workers surveyed said that retirement planning makes them feel stressed. Investor confidence was continually tested as the year wore on, and it’s likely that this percentage rose — perhaps even substantially.
This week, Craig Siminski, of CMS Retirement Income Planning, shares an article presenting five steps that could help focus and enhance your retirement savings strategy in 2021.
1. Consider Increasing Your Savings by just 1%:
If you participate in a retirement savings plan at work, commit to increasing your contribution rate by just 1%, and then try to increase it again whenever possible until you reach the maximum amount allowed. The chart below illustrates the powerful difference contributing just 1% more each year can make over time.
The Power of 1%
Maria and Nick are hired at the same time at a $50,000 annual salary. Both contribute 6% of their salaries to their retirement accounts and receive a 3% raise each year. Nick maintains the 6% rate throughout his career, while Maria increases her rate by 1% each year until she hits 15%. After 30 years, Maria would have accumulated more than double the amount that Nick has.
2. Review your tax situation
It makes sense to review your retirement savings strategy periodically in light of your current tax situation. That’s because retirement savings plans and IRAs not only help you accumulate savings for the future, they can help lower your income taxes now.
Every dollar you contribute to a traditional (non-Roth) retirement savings plan at work reduces the amount of your current taxable income. If neither you nor your spouse is covered by a work-based plan, contributions to a traditional IRA are…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 22 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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