Retirement Account Resolutions For The New Year

Retirement account resolutions will help you save more money in the New Year to help you boost your nest egg for when you finally retire

. You may have a larger balance in your account now than you did at the start of 2010, but may not have enough. Statistics from various studies show that the average American worker does not have enough money for a retirement that could span thirty years, but here are some things you can do to increase your chances at a secure retirement:

Increase your contributions by at least one percent in the coming year. If your financial status makes it possible, consider upping it to two percent if you can. An ING survey found that about 87% of 401K participants can afford to dial up their contributions by 1% per year, while about 60% say that they can go beyond that and invest an extra 3%. Increasing your contributions by a few percentage points can pay off well, even if the increase is done gradually.

Save enough to qualify for matching contributions from your employer. If you contribute enough to qualify, the match can be seen as a guaranteed return on your investment or contribution. The most popular 401K matching formula is fifty cents per dollar contributed by an employee to a maximum of 6% of his or her salary. This formula gives an employee with annual earnings of $50,000 while saving $3,000 over the same duration an additional $1,500 in matching contributions from the employer.

Use tax breaks to increase your overall funds. There are a lot of tax incentives for workers who have retirement savings accounts. For example, every dollar workers place in retirement accounts make them eligible for tax deductions and allows them to preserve more of their money. Traditional 401Ks and IRAs are just some of the tax-advantaged tools workers can use to save up for retirement. Participants can defer taxes to a maximum amount of $16,500 in their 401Ks and up to $5,000 in their IRAs next year. Workers who are 50 years of age or older can increase their limits to $22,000 for their 401Ks and $6,000 in their IRAs because of the so-called contribution catch-up feature.

There are a lot of relatively easy steps seniors can make to ensure that they have better chances at retirement security. Some of these steps can be accomplished with the tools employees already have, such as their existing 401Ks. Aside from contributing regularly, claiming your employer matches, using tax breaks, and saving more are just some of the retirement account resolutions you can make for the New Year.

by: Katherine Smith

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