As Easter approaches, weโre reminded of new chapters of life and promise for the future. While retirement may seem far down the road for some, itโs never too early to start financially preparing.
We have all the information you need growing your nest egg โ so you donโt put all your eggs in one basket.
Maximize Employer Contributions
If your employer offers retirement plans like a 401(k) or a 403(b), be sure to take full advantage of it. These accounts, are your secret weapon to a financially secure retirement. Many companies will match their employeeโs contributions up to a certain percentage โ meaning you can receive essentially free money just buy contributing a set amount from each paycheck. The key is to max it out โ meaning contribute the maximum percentage that your employer will match and contribute to your account. It may mean a slightly smaller paycheck now, but the payoff in retirement will be well worth it.
Individual Retirement Accounts
Perhaps your employer doesnโt offer a retirement plan or you want to have a separate retirement account. If thatโs the case, you can receive favorable tax treatment from the IRS on an Individual Retirement Account (IRA). A traditional IRA lets your earning grow tax-deferred and you will pay taxes on your investment gains only when your make withdrawals in retirement. A Roth IRA, on the other hand, offers tax-free growth and tax-free withdrawals in retirement.
Certificate of Deposit
For shorter to mid-term savings goals, a Certificate of Deposit (CD) is a great options. CDs often have higher interest rates your savings account, but note, the funds are not easily accessible. With CDs, you make one large deposit that you agree to leave untouched for the term you select. If you need to withdraw these funds, there is typically a significant penalty.
Increase Contributions Gradually
Whether itโs once a year or with every bonus, increasing your contributions gradually to your accounts is key to maximizing your nest egg. This increase can be as subtle or as large as you want โ just make sure itโs manageable. If you receive a 3% salary increase, consider increasing your savings contributions by 1-2%. If you receive a $1,000 bonus, consider depositing that right into your high-yield savings. When it comes to building a nest egg and a solid financial future, consistency is crucial.
For more information on saving for retirement and savings calculators to help build your personalized retirement plan, visit www.penncommunitybank.com. Happy Easter!
