A great benefit for tax payers is getting tax deductions for contributions they make to their IRAs! That is just an added bonus for having an IRA. The main reason you should have one and be contributing to it regularly is so that you are prepared. An IRA exists so you can enjoy your retirement the way you want and not spend it working. I want to share some ways you can prepare for retirement by contributing to your IRA and maxing out your contribution.
1. Contribute Monthly
One thing people fail to do is contribute to their IRA monthly. They tend to wait until they have extra money sitting around, but that way will not help you reach your retirement goals. A better approach is to set up a monthly withdrawal. By setting up a monthly withdrawal, you can ensure that your money will accumulate!
2. Hit Your Max
Make sure you hit your maximum contribution! The maximum contribution for anyone under 50 is $5,500, and for anyone 50 and over it is $6,500. Near the end of the year, check to see how much you put away for that year, and if you didn’t meet the maximum contribution yet, focus on saving up and hitting it. You have until April 18, 2016, to contribute for the 2015 tax season. However, you want to avoid exceeding that limit, because if you exceed it, you will be taxed 6% per year as long as the excess amount remains in your IRA.
3. Benefit From Work Benefits
If your employer offers a 401k plan, take advantage of that plan especially if there is an employer match! Most employers will match a certain amount of what is added. Find out what the match amount is and make sure you are putting at least that much in. Whenever you get a raise, take that extra amount and add it to what you are putting away monthly. You are likely used to living off of your previous income, so utilize that extra income by adding it to what you are putting away for retirement. If you have already reached maximum contribution, set it up as an automatic transfer into a savings account.
These are just a few tips on how you can save for retirement. Whichever of these you decide to do, set it up now and be prepared to be able to enjoy your retirement!
A Mazzo Accounting provides a variety of accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll, accounting and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance.