Five or fifty years from retirement, you’ve probably pictured your life after leaving the workforce. When you imagine being retired, maybe you’re traveling the world, building a dream home, or embarking on an exciting second act for your career. Whatever your vision of a happy retirement, only thorough planning and saving can make it possible. Simply maximizing contributions to your 401(K) won’t be enough for most people. Here are five tricks for building the happy retirement of your dreams.
Increase your payroll deductions
Wherever you are in your career, you’re missing out on a substantial portion of your compensation if you don’t maximize your payroll deductions. But you should also be re-evaluating your payroll contributions to your 401(k) every year. A good rule of thumb is to increase the amount you deduct by one percent every year until you contribute 20 percent of your income to retirement.
Evaluate if your company’s 401(k) is worth it, however, as many carry substantial fees that could significantly impact your retirement income. Evaluate whether it’s better to put most of your contribution into an IRA instead.
Make the most of your time in the market
Individual stocks are unpredictable, but stock prices generally go up over time. Rather than trying to time the market, it’s better to maximize the amount of time your money spends in the market. Early in your career, front load your investments so more of your money spends more time in the market.
Devote a side-hustle to a solo 401(k)
If you consult on the side or have a second part-time job, you can put a larger percentage of your income into a solo 401(k) for retirement. The contribution limits are much higher than retirement accounts through employers. Even if you already have a 401(k), you can put as much as 25 percent of your income from self-employment into a solo account or SEP IRA.
If you don’t have alternate income streams, consider starting an enterprise that you’ll want to continue into retirement. Working part-time is a great way to stay busy, engaged, and generate revenue for your other retirement dreams.
Maximize tax savings
Unless you’re working with an accountant who also specializes in retirement planning, you may not be taking full advantage of all the available tax savings. By saving money on the taxes you owe, you’re generating thousands of dollars you can invest or save for after you leave the workforce.
Most individuals find their accountant through references, but do additional research on your own to ensure they’ll be able to make the most of your deductions.
Meet with a team of holistic retirement strategists.
Building a happy retirement takes a lifetime of planning. Make the most of your savings and contributions by working with a retirement strategist who brings a holistic approach. By examining all aspects of your financial life, you can make minor adjustments that can mean the difference of hundreds of thousands of dollars during retirement.
True happiness is being able to live out your lifelong dreams after you retire. Working with an expert retirement strategist can get you there.
OWLFI is a holistic wealth management advisory that helps people plan for happy retirements.
The OWFI team brings a range of diverse backgrounds in finance to every client for a holistic approach to all their wealth planning needs, including investments, taxes, business solutions, and retirement. We want to give individuals the freedom to enjoy retirement the way they’ve always planned, sometimes with hundreds of thousands more in their accounts than without the OWLFI strategy. All while reducing the inherent risk of your portfolios.
Get to know our team of retirement structuring specialists during an initial consultation. We help our clients build happy retirements.