It’s never too early to start thinking about retirement, and if you’ve already started setting money aside, it’s always good to do a yearly evaluation to check to see if you’re on track to meet your retirement savings goals. Although Social Security benefits can provide you with some income once you leave the workforce, most Americans find it’s not nearly enough to live off of.
Below are just a few of the things you’ll want to consider.
Supplementing SSI with personal savings
If you plan on using savings to help finance your retirement, some financial experts recommend the following. If you’re making approximately $60,000 per year, at age 30 you should have $30k saved, at age 40, you should have $60k saved, and by age 60, you should have $300,000 saved. It’s also recommended that you target 7x that annual salary (for savings) at age 55, you should have 9x your salary set aside by age 60, and 11x your annual income saved by age 65.
On the other hand, if you know you’ll have other income sources when you retire, such as rental income, annuities, or pension funds, you may not need to have this much in your personal savings.
Most working adults should aim to save 15% of their annual income
Most financial experts tell their clients they should set aside 15% of their annual income to use for their retirement. The good news is that in most cases, putting money aside into a retirement account can lower your Adjusted Gross Income (AGI) when you file your taxes.
The most common ways to use retirement savings to lower your tax bill include contributing to an IRA, increasing your 401(k) withholding, making catch-up contributions (after you turn 50), opening a spousal IRA, contributing to a 401(k) and IRA during the same tax year, and saving money in a Roth IRA.
If you have questions about whether you’re on track to meet your retirement savings goals and you’d like more information about how saving for retirement can reduce your taxable income, we can help. The team at Hughes, Snell and Co., P.A. has years of experience in helping people just like you understand how retirement savings can benefit your tax situation. Are you ready to get started? Call our office today to schedule a free, no-cost consultation. Remember- it’s never too late to incorporate retirement savings into your tax strategy. Call us today to learn more.