Are you unhappy with the progress you see in your retirement savings? Or are you looking for new ways to keep the momentum going? As markets fluctuate, laws change and taxes inevitably increase, it is more apparent than ever before that Americans need to employ every advantage at their disposal to reach their retirement goals.
Below are five options investors have used to help boost their progress toward financial freedom.
Tax-Free Savings
Can you imagine the bliss of a life without the burden of paying taxes on your hard-earned money? Living a tax-free life in your golden years does not have to be a dream; it can be a reality with a Roth IRA.
The Roth IRA is one of the greatest gifts the government has ever given us. Use it to your advantage!
It’s not too late to convert your IRA to a Roth! Read our most popular series, Roth IRAs Don’t Have to be a Young Person’s Game. Learn how to convert your current IRA or old employer’s 401k to a Roth IRA.
Tax-Shelter Business Income
There is no reason for a small business owner not to take advantage of the benefits of retirement accounts tailored to you, like a SEP IRA. With a SEP, you can defer taxes for the lessor of 25 percent of compensation or the maximum allowable, $66,000, as defined by the IRS in 2023.
This contribution limit is significantly greater than the maximum allowable $6,500 for Traditional or Roth IRAs. If you are ready to start generating retirement savings from the income generated from your business instead of paying the IRS, reach out to Preferred Trust and get started.
Diversification
No one wants to see their retirement savings derailed by a certain investment. But let’s face it: we do not have a crystal ball to predict the future performance of our investment choices. So, how do retirement savers help mitigate that risk? Think of one word—diversification.
Diversification aims to help mitigate substantial losses in your portfolio should a specific investment, asset class, or sector suffer a loss. Diversification also allows your portfolio to experience growth even when other portions of your portfolio decline.
Is your portfolio truly diversified if you are only invested in two different assets? Your portfolio should look like an ice cream shop with myriad flavors.
What happens if your ice cream shop only has two flavors to scoop from 75 percent stocks and 25 percent gold? If one of those flavors experiences a shortage (your stocks experience a market correction), you won’t be able to scoop up 75 percent of your ice cream to build your retirement savings. The other 25 percent of your other flavor may not be enough to counterbalance the potential losses.
If you are still determining what other investments might be the right flavor to balance your retirement portfolio, ask your financial planner if they are not laser-focused on only the market options, talk to friends and family, or visit our Investment Community on the Preferred Trust website.
Contribute Often
Making your annual contribution can help you in a variety of different ways.
Do you ever get that feeling that Tax Day is going to be a blood bath? You can make your annual contribution if you have a tax-deferred IRA account (Traditional, SEP, or SIMPLE IRA) at Preferred Trust. Your contribution can be deducted depending on your modified gross income to help alleviate some of your tax liability.
Have you heard of the contribution sweet spot? It’s the time between the start of the new year and the tax filing deadline when IRA owners can make contributions for both the previous and current years. For example, in February 2024, you could contribute for 2023 and 2024 for a quick infusion of liquidity to fund your next investment.
Preserving Principle
A lot of effort and strategizing is needed to build a retirement nest egg. However, many need more foresight to strategize how to ensure their nest egg lasts through their retirement years and leaves a legacy for their loved ones.
Once people retire, they typically park their funds in less risky investments that provide a minimal yield that is not enough to cover the amount of their withdrawals. This means they will likely be drawing down their principle.
Seek investment options that can provide a steady stream of monthly income through interest or dividends to mitigate the depletion of your nest egg.
If you have further questions or would like to deploy one of these five strategies with an IRA account at Preferred Trust, give us a call at (888) 990-7892 option 2 or email us at clientservice@ptcemail.com.
Members of the editorial and news staff of the Las Vegas Review-Journal were not involved in the creation of this content.