Hope your kids are grown up enough to look after their studies. And perhaps you’re planning your wedding anniversary getaway with your better half in some serene island. Life is awesome – yes it is. But college bills impend and you’re not taking care of your retirement accounts because you sock away funds for college bills. Well, 40s is the right time to think about your achieving long-term financial goals.
And here are 3 outstanding headways that that can make your life financially consistent for the rest of your life.
Reinforce investment – Saving for your retirement should be your priority. Max out your contributions to your employer retirement plan though you must not stash off your savings in tax-deferred accounts as it may cause you face huge tax hit at the time of retirement. Withdrawals from traditional IRAs and 401(k) are taxed at ordinary income tax rate. Saving enough in the retirement plan would also help you get the full advantage of company match.
If you’re thinking about contributing to Roth IRA, this is the high time. Such contributions are after-taxed but withdrawals are penalty and tax-free as long as you’re 59 ½ at least and have continued with Roth for a minimum of five years.
You can think about taxable savings accounts too as it would help you cut down your tax bills during retirement. A tax-efficient index fund can be tried out. An actively managed funds with comparatively lower turnover can be also tried out as they hold down tax bills even further.
Max out your income – Don’t just depend on how much money you take home at the end of month. Be sure of how much employee benefits you’re taking advantage of as this could build wealth for you and contribute significantly to your retirement security. Does the employer match contribution to a HSA (health savings account) or offer retirees any sort of health benefits or a pension? Nowadays, many people switch their jobs just to work for a company that offers better and more lucrative retirement benefits.
You can always remain agile for some other income sources. There are many jobs to do during your after-office hours. You may find such options on the Internet easily.
Pay off your debts – Focus on retiring mortgage-free. This is a great, worthy and lifetime goal. Mortgage payment is the largest expense that you can eliminate before retirement to ensure that you don’t need to withdraw a lump sum from your retirement savings during market slump to pay your bills. However, at your 40s, you may have some better uses for your hard-earned dollars especially if have a mortgage loan with low interest rate. Under such a circumstance, you can be focused on paying off debts with higher interest rate like parent college loans or credit card bills. And if you still have money in your hand, you can then consider accelerating mortgage payment. You can also refinance existing mortgage to a 15-year mortgage.
Everything can’t be bought for money but you can’t ever ignore its importance though. If there is struggle for money always, your life would become a burden. Whatever you do, your key target should be making your life afterwards financially stable and tension-free so you can enjoy your life to the fullest.
Submitted by Jonny pean @http://financewand.com/