Subscribe Feed (RSS)Within few years you will embark on a new journey of life – retirement. But before heading towards the peak of your life, do you have a fallback plan in relations to finances. To ensure a comfortable and secured retired life it is wiser to invest in retirements solutions from the very youth of your life. It’s never too early to create a retirement plan; however careful consideration and assessment of your investments must be made to guarantee an enjoyable future. With these few simple tips on early retirement planning you can conveniently secure your old age.
A solid retirement plan commences with a concrete budget. Budgeting allows you to determine a specific amount that you can contribute towards your retirement plan each month. A budget calculator will enable you to determine a convenient amount that you can save from your expendable monthly income. The amount you contribute to your retirement solution is largely dependent on your available savings and your present age. Financial experts suggest that 10% of your income should be directed towards retirement planning if you’re in your 20s, 15% if in 30s and 20% if in 40s.
Your employer contributes up to 6% of your income in the retirement plan, to achieve a full match you should contribute univocally in accordance with your employer’s contribution. However, contributing more than the match is always a good idea for extra savings and tax breaks.
To reduce your income taxes and save more money, invest money into your retirement solution plans. Contributing the maximum amount of money to your 401(k) reduces federal income taxes and most state taxes. For example, if you earn $50,000 annually and contribute a maximum of $16,500 towards your retirement plan, then you will be taxed on federal income for $33,500. State income taxes vary. After age 50, you are allowed a catch-up contribution of an additional $5,000 per year.
