5 ways to boost your retirement savings


Asian senior couple analyzing finances.

Key Points

  • With your ideal retirement in mind, it’s important to have a plan to get you there.
  • You can work toward achieving the retirement you envision with personalized advice from us.
  • These strategies can help you boost your savings and set you up to achieve your vision.

Take a moment to envision your ideal retirement: Where are you? How are you spending your time? How much will it cost? Are you on track to get there?

With personalized advice and smart planning, you can work toward achieving your retirement goals. Check out these five ways to rev up savings and work with us to achieve your vision.

1. Maximize your employer’s retirement plan

If your employer offers to match a portion of your 401(k) contributions, contribute at least that amount. As part of the financial planning process, we will recommend an amount to save, as well as investments that help support your financial goals, risk tolerance and time horizon.

In addition, consider the following:

  • Contribute the annual maximum allowed — for 2021, that’s $19,500.
  • If you are 50+ years old, you can contribute an additional $6,500 in 2021 to your 401(k) account using catch-up contributions.
  • Contributions come out of your paycheck before taxes, reducing your taxable income.
  • Earnings on before-tax contributions and employer contributions are tax-deferred.

 

2. Invest in a Roth IRA or traditional IRA

Two of the most common types of individual retirement accounts are Roth IRAs and traditional IRAs.

Roth IRA

Traditional IRA

  • Earnings grow tax-free.
  • Qualified withdrawals are generally tax-free (if you satisfy certain requirements).
  • Must have income to contribute (contributions may be limited based on filing status and income level).1
  • Accounts aren’t subject to required minimum distributions (RMDs).
  • Earnings grow tax deferred.
  • Withdrawals are taxed based on current income.
  • No income restrictions for making contributions or converting funds to a Roth IRA in the future.
  • Accounts are subject to RMDs, beginning at age 72.

 

3. Open a health savings account

A health savings account, or HSA, can help you pay medical expenses now, and it’s another option to save for retirement. To qualify for an HSA, you must have a high-deductible health insurance policy.

HSAs provide three tax benefits:

  • Contributions are pre-tax, which reduces your taxable income.
  • Earnings grow tax-deferred.
  • Withdrawals for medical expenses are tax-free.

After you reach age 65, you can also withdraw HSA funds for non-medical reasons — though you will pay taxes on these withdrawals.

 

4. Use SIMPLE, SEP or solo 401(k) plans if you have 1099 earnings

If you’re self-employed or earn freelance (1099-reported) income, you might qualify for a Savings Incentive Match Plan for Employees (SIMPLE) IRA, a Simplified Employee Pension (SEP) IRA or a solo 401(k) — even if you already contribute to a 401(k) with another primary employer.

Before you max out both your employee-sponsored 401(k) and one of these plans, confirm IRS contribution limits.

 

5. Consider growth-oriented investments

Inflation has been a consistent factor in the U.S. economy over time. While the inflation rate can vary from year to year, it typically hovers in the 2–4% range. An inflation rate of 3% may not seem a reason for concern, but it adds up over time.

For that reason, it’s important for the returns and income from your investment portfolio to stay ahead of inflation. We can recommend a diversified investment portfolio that factors in growth and income to support your financial goals, time horizon and risk tolerance.

 

Achieve the retirement you want

A solid plan can help you stay on track to meet your retirement goals. By entering your goals online, you can assess your financial confidence and see how investing more money, adding additional goals or withdrawing funds may impact your overall progress. Together, we’ll review your goal timeline and determine the next steps to help you make progress toward achieving your goals. 

To activate online goal tracking, call us at 800.297.2012 to schedule an appointment. Once you have access, you can log in to the secure site on ameriprise.com at any time to update your goals.