Getting financially fit doesn’t have to be scary or hard. Mark Baird at GRS Accounting Solutions suggests these low-stress strategies that you can apply today to be better prepared for your long-term financial needs.
Start saving for retirement early.
Begin with a small amount that you will not miss and can afford, such as 1% of your paycheck or $25 per month. When you receive a pay raise, add a portion of it to your automatically deducted monthly savings straightaway. By making this change before you get used to your higher paycheck, it won’t feel like a loss.
Take advantage of 401(k) employer matching.
Many companies offer their employees 401(k) benefits that include employer matching up to a certain percentage. This is essentially free additional contributions towards your retirement savings and a better return on your investment!
Traditional IRA vs Roth IRA – know the difference and choose wisely!
The main difference comes down to when you pay taxes on that money. Once you start pulling out money from your Roth IRA, you can do so without paying taxes on this extra income. Generally, in retirement you really need that extra money and have less time and ability to work. This makes a Roth IRA the best option for most people. However, there are always exceptions to the rule.
Review your savings and investments annually.
Financial goals and needs evolve over time. An annual review helps you determine if your plan is meeting your needs and track your long-term financial goals. Ideally, this review would include your financial advisor and tax accountant to ensure you don’t end up with costly surprises during tax season.
Withdrawing from your retirement account early can be costly.
Depending on the amount of money and your taxable income, withdrawing money from your retirement accounts could put you in a higher tax bracket and cost you significantly more in taxes. If you are under 59 1/2 years old, then you’ll owe a 10 percent penalty as well as additional taxes on any retirement withdrawals. As a result, that extra money today may cost you big later.
Whether you are looking for the right type of IRA to suit your needs, retirement advice or general financial planning guidance GRS Accounting Solutions can help you. Learn more at: grsaccountingsolutions.com