One of the biggest worries tax resolution and planning clients have in the last three or four months is the impact COVID has had on retirement savings.
People have lost money from market volatility. People even more face dipping into retirement accounts to stay afloat as the pandemic impacts everyone’s earning power.
I want to share a few ideas for staying on track – or getting back on it.
• First of all, if your 401(k) contributions aren’t maxed out, that’s an ideal place to start. Naturally, you now may need these funds in your pocket than in your account. However, the difference of only a few percent each week can add up considerably over the course of a year (or a career). Do the math and try to squeeze a bit more out.
• Convert to Roth structures! There are simply too many advantages to Roth entities. If you still have a traditional IRA, converting it to a Roth could prove a smart choice. This is especially true in light of the stock market dragging a bit these days.
• If, like many Americans, you took out a 401(k) loan, then do everything you can to pay off the loan. While you “owe” that money, your ability to save is impacted. So the sooner you can make it work, the better you’ll be.
• One thing no one likes discussing when “retirement” comes up is how long will you actually work? Years ago, 65 was the target age. But for white-collar jobs, we now expect workers and managers to be productive well into their seventies. Clarifying when (or if) you plan to retire can allow you to accurately engineer your contributions to hit your particular retirement goals.
• If you really want to “jump start” your retirement savings, you need to watch your spending. Do you need to lease the coolest car on the lot? Do you really need to buy the biggest house in the neighborhood? Reallocating several thousand dollars each year from luxuries to retirement assets can literally be worth millions over the course of your lifetime.
• Lastly, do NOT try to do it all yourself. You need professional advice and having a relationship with a tax attorney (such as myself) who can understand your goals. We can offer advice and, together, could give you real direction for retirement savings.
We so often we hear from taxpayers who have well defined goals, but simply don’t know how to reach them. If you’d like to discuss these ideas and more, feel free to send an email (firstname.lastname@example.org) or schedule a call (678-509-6500) to see if you’re getting the most from money.
Stay Healthy and Have a Happy 4th of July!
Your Local Atlanta Tax Lawyer