Congratulations!
Just by taking the time to research and learn more about how you and your family can start to think about retirement today, you have increased the likelihood that you will be well prepared as you enter your golden years.
And whether you are still in the early phase of your career or you are a seasoned professional, there is a set of key retirement investment strategies you should be considering to make the most out of all the years of your hard work.
One of the most effective ways to maximize your retirement is to take advantage of every dollar your employer is willing to match as part of your organization’s retirement benefits.
Most employers, after a certain period of time, offer to match the savings you contribute to their organization’s larger retirement savings programs, up to a certain percentage of either your income or your own contributions.
So, if you are able, contribute up to the employer match so you can not only benefit from the extra money but also take advantage of how the savings and investment gains grow tax-free.
After contributing up to your employer-sponsored match, another retirement investment strategy you can consider is using an individual retirement account (IRA) or a Roth IRA, both of which come with their own tax advantages.
Traditional IRAs use your pre-tax income for contributions, are typically deducted from your paycheck (and, in turn, lower your taxable income), and are subject to taxes when you make withdrawals during retirement.
By contrast, Roth IRAs use after-tax contributions. If you choose to use a Roth IRA, however, your withdrawals during retirement will not be subject to tax.
To find the best savings method for your situation, you can speak to a financial planning professional to determine what works for your current and projected tax liability.
Fidelity Investments estimates that a couple in their mid-60s retiring today could pay $285,000 in healthcare and medical expenses during retirement.
If you haven’t already started budgeting for these potential costs, you should consider opening a personal health savings account (HSA). Contributions to HSAs can also grow and be used for medical expenses tax-free, making them one of the most powerful retirement investment strategies.
Investing in an index or retirement fund can make your retirement planning easier, but you may be shocked to learn how much you pay in fees to the management firm.
If you haven’t already, research what your management fees are—typically a percentage of your portfolio—and benchmark them against industry averages for your type of investments.
Ultimately, you should aim for the right balance of performance, risk, and fees so what you’re paying the investment management firm doesn’t cut too much into your gains.
You may hear advice and suggestions from others about how much you should be removing from your savings each month from your retirement. However, everyone’s needs, goals, and financial resources are different.
Therefore, we recommend that you work with a financial planning professional to develop a budget and a plan specifically catered to your needs. This process should include creating several scenarios that account for different situations to see how your retirement investment strategies hold up.
Although Social Security benefits shouldn't be the only pillar of your retirement plan, understanding how to maximize your monthly income from this source is important.
If you are able, work as long as you can and delay taking Social Security benefits as soon as you retire. For most people currently considering retirement, full retirement is at age 67, but if you delay initiating your Social Security benefits until age 70, you could increase your Social Security payments by as much as 8 percent each year.
There are always going to be ups and downs in the stock market, but it is important to stay the course and trust your plan.
If you have diversified your portfolio, evaluated your options, and planned accordingly, you are more likely to make data-driven decisions that reduce your risk exposure as you get older. In other words, remember that when it comes to retirement investment strategies, you are playing a long game.
After reading these tips, you may feel like you don’t know where to start—or you may feel like you are already well on your way.
In either case, speaking with a financial planning professional and having them get hands-on to help you implement your retirement investment strategies and align them with your goals and values can pay off in the future.
That’s where the team at Harvest Wealth Group comes in. We know that there’s more to life than the value of your bank account, but we also understand that proactive savings can help you enjoy the moments that really matter more.
If you are ready to connect with an experienced professional, we welcome the chance to get to know you and answer any questions you have. In the meantime, we would like to offer you a free resource, 10 Things a Smart Investor Should Consider in an Economic Downturn.