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This post is part of our “13 Money Resolutions for 2013” series. You can check out the first post for an updated list of the entire series.
Now that we’ve covered several ways to save money in your budget for the new year, you should have more space to save and invest. One crucial area to focus on is your retirement savings. Everyone has different goals and dreams for retirement, but the general idea is to ensure you can cover your living costs until you’re 80 or 90 years old. Utilizing tax incentives and high-yield savings accounts can help you build a nice nest egg for the future.
So, make sure to max out those retirement accounts!
Reminder: I am not a professional adviser. It’s a good idea to consult one to ensure you are maximizing your retirement funds.
**Maximize Your Company Match**
Who can resist free money? Make sure you take full advantage of any retirement account match your company offers. Most matches are before taxes, so if you pay 25% in taxes and you contribute $100 gross to your retirement account with a $100 company match, your paycheck is reduced by $75, but your retirement account grows by $200. It’s a great deal!
**Max Out Your Retirement Account**
Every country has different names for retirement accounts, but the principle is the same: these accounts are generally tax-free. Make sure you are depositing the maximum amount every year. To make it easier, set up an automatic transfer every payday so you don’t even miss the money. This is much simpler than waiting until the end of the month, when the money might already be gone.
**Max Out Your Tax-Free Savings Account**
In the UK, these accounts are called ISAs. If you work there, you can contribute up to £11,280 in stocks and shares or a mix of £5,760 in cash and the rest in stocks and shares, all tax-free. Try to leave the money in these accounts and max them out each tax year, as you can’t replace money once it’s withdrawn.
**Max Out Your College Funds**
If you have kids, make sure to contribute the maximum amount into their college funds. Some states offer matches or tax incentives. Whatever the benefit, make sure you take full advantage of it.
**Max It All Out!**
Other accounts you should consider maxing out include Health Savings Accounts, though you must use this money for healthcare expenses or lose it. Savings accounts with bonus rates are also great options. Additionally, there are incentives like Individual Development Accounts in the US, which offer government matches for low earners. While these match amounts are smaller, they can be a great deal for those who qualify.
Is there anything else savers should max out in 2013?