There are some ideas in this article that you should be paying attention to.
About 10,000 baby boomers will turn 65 every day until around 2030. If you’re part of that group and planning ahead for a comfortable retirement, the Pennsylvania Institute of Certified Public Accountants (PICPA) offers this advice for securing your financial future.
Fund Your 401(k)
If you haven’t already done so, sign up for your company-sponsored retirement plan. Automatic payments deducted from your paycheck will add up to a hefty nest egg over the months and years. Try to donate at least as much as required to qualify for the matching donation from your employer, if one exists. That employer match is like an added bonus, and along with your own contributions it will grow over time as it earns dividends and interest. Remember, too, that your contribution is excluded from your taxable income, which helps lower your tax bite.
Create Your Own Account
If your company doesn’t have a 401(k), consider setting up your own tax-advantaged retirement account, such as a traditional or Roth IRA. You can contribute up to $5,500 a year (up to $6,500 if you’re 50 or older). With a traditional IRA, you can deduct your contribution from your taxable income, but distributions are taxable. For a Roth IRA, your contribution is not tax deductible, but qualified distributions are not taxable.
Don’t Raid Your Nest Egg
Removing funds from your savings can be particularly tempting when you switch jobs and have access to money you may have accumulated in a 401(k) or other company-sponsored retirement vehicle. Your options typically include leaving the money in your old employer’s plan, rolling it into an IRA or your new employer’s program, or receiving a check from the old plan. There are several good reasons to resist asking for that check and spending it. First, your old employer will withhold 20 percent of the money for income taxes, and you may end up owing more in taxes depending on your bracket. If your service with the company ends before you turn 55, you’ll also face a 10 percent early-withdrawal penalty, which means one-third of your money is gone before you even cash the check. Since the money was never in your budget in the first place, it’s better to leave it in a tax-advantaged retirement account and reap the benefits later on rather than splurging today.