Have you ever dreamed of being a millionaire? For some, even the dream of having a hundred thousand in the bank seems like a far-away hope or distant dream with little hope of becoming reality. The problem is that as inflation continues, a seven figure retirement account will be all but necessary in order to retire in comfort. This can be daunting, especially if you’re over 40 with little saved towards retirement. Fortunately, you can build it in just three simple steps.
- Start Now
According to the Census Bureau, the typical household income tops out at nearly $71,000 between the ages of 45 and 54, so if you haven’t saved any, don’t delay. Work to get out of debt and build an emergency fund of six months of expenses first, and then invest in a good growth stock mutual fund with a strong track record. An amount such as $800 per month could land you 1 – 1.4 million after 25 years. Not bad for having started so late! The later you wait though, the more difficult it becomes. Five years from now, you’ll have to invest an extra $500 a month to make your million-dollar goal and even then the end return will be lower than had you started earlier.
- Make the Most of Changes in Your Work
There are still working years ahead of you and most people will change jobs at least one more time before retirement. If you do, you’ll have a decision to make. Should you cash out your 401(k), leave it as is, or roll it over into an individual retirement account (IRA)? There are lots of factors to consider, but it’s generally best to roll your 401(k) over into an IRA whenever you change jobs. If you request a direct roll over, you won’t be charged taxes and penalties for an early withdrawal. You’re old 401(k) provider will write you a check for your balance, payable to your new IRA.
- Don’t Fly Solo
This is your future we’re talking about. It’s best to work with someone who has your best interests in mind and can help you navigate the tricky water towards retirement. A professional with an understanding of the tax code and how your financial decisions can impact your future can help make sure you’re headed in the right direction to retire in comfort.
If you’d like to know more about the tax implications concerning your retirement, contact our offices in Joplin, MO today. Our team of Certified Public Accountants will give you the information you need to rest secure.