Maximize Your Savings with a Retirement Plan

Over the last few years, your contribution towards your retirement account makes a big difference. Your biggest asset is time, while you’re young and have decades for you retire. You might not have a lot of money to buy a house, but it’s in your hand to contribute towards retirement because you have so much time ahead of you. Otherwise, years will pass by faster and then you contemplate that you tapped out those funds.

For financial stability and success at the age of 60s, it is significantly important to stay the course with your investment strategy. Be careful about impulsive decisions or be influenced by volatile markets. Ensure your level of risk is appropriate for your shorter time horizon. Below are some strategies disclosed by Randall T. Becker, you can select and choose to assemble your plan for overcoming your savings shortfall. Via these strategies, you can win the retirement planning game.

Compounding Interest

The maximum you put in, the higher you end up with — Interest and Appreciation. Compound interest cycle of earning “interest on interest” which can cause wealth to rapidly snowball. However, the more is your principal amount, the faster interest it will grow. Your money can work better on your behalf if you consider to max out your retirement planning.

For instance: Suppose $10,000 appreciating 8% a year for around 20 years, resulting in worth over $46,600. In case, you manage to get a 10% growth rate, you can aid with almost $67,275. The more you can fund today, the maximum it`ll grow and the more you’ll have over time.

Income Tax Deduction

Payments towards 401(k), 403(b), and traditional IRA are tax-deductible because these accounts are tax-deferred. At the time of retirement disbursements, the tax paid by you is lesser in amount and a larger portion of your income gets to grow during that time.

On the other hand, Roth accounts are not tax-deductible. Hence, your money will grow tax-free. While contributing to Roth accounts, you can take benefits of tax-free income and end up with more tax-free money in long run.

Permanent Life Insurance

Among other types of life insurance policies available, permanent life policies can be a lucrative decision to supplement retirement planning. While buying a permanent life insurance plan — either it’s variable, universal or whole life insurance or a hybrid — a few of your premiums get contributed into a separate account that creates cash value alongside or in addition to your death benefit.

Another advantage of permanent life insurance is: The ability to withdraw or borrow against cash value that you can use to pay your mortgage for a few months, in case you lose your job, or to fund your retirement. Be careful about the loans and withdrawals will lower your death benefit unless they are repaid. As Per Randall T. Becker if you borrow more than the surrender value, your policy could lapse.

Rolling over Retirement Funds

In the case of job change, it is important to plan for your employee retirement saving accounts. Either, you have the choice to cash them out, leave them with the employer (if the employer allows this) or roll them over into an IRA or, perhaps, into the 401(k) at your new job.

According to Randy Becker Financial Rolling your employee retirement savings into an IRA is your best option. With an IRA, you can take various investment decision, rather than being limited by the choices in an employee plan.

Originally published at on April 29, 2017.