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This post is part of a 13 money resolutions for 2013 series. You can check the first post for an updated list of the following ones.
Now that we have gone over many little ways to save money in your
budget for the new year, you should have more room to save and invest.
One very important thing you should be saving and investing in is your retirement. We all have different savings goals and dreams for retirement, but the general idea is that you will probably live until you are 80 or 90 years old, and need to cover your living costs until then. Taking advantage of tax incentives and high rate savings accounts will help you build a comfortable nest egg.
So go max out those retirement accounts!
Reminder: I am not a professional adviser and you should probably seek one to make sure you maximize your retirement money.
Max out your company match
Who can say no to free money? Whatever the match your company offers on your retirement account, make sure you take advantage of it. Most matches are before taxes, so if you pay 25% of taxes, and put $100 gross in your retirement account with $100 company match, your paycheck will be reduced by $75, but your retirement account will grow by $200. How awesome is that?
Max out your retirement account
Every country has a different name for those retirement accounts but the principle is the same, and those accounts are generally tax free so make sure you take full advantage of them by depositing the maximum amount every year. In order to make it easy, have the amount wired automatically every pay day and you won’t miss the money. It is much easier than having to think about it at the end of the month, plus the money will probably be gone by then.
Max out your tax free savings account
In the UK those accounts are called ISAs. If you work there, you are entitled to £11,280 in stock and shares or a mix of £5,760 maximum in cash and the rest in stocks and shares, with all your money and capital gains tax free. If you take money out, you can’t put it back, so try to leave it there and max it out every tax year.
Max out your college funds
If you have kids, make sure you put the maximum amount into their college funds. Some states offer matches, other tax incentives… Whatever it is, there is surely something you can profit of.
Max it all out!
Other accounts include Health Savings Accounts, although you have to spend the money on healthcare or lose it so it may be trickier, and savings accounts with a bonus rate. There are incentives for small earners to get a government match when they save money, like the Individual Development Accounts in the US. Those matches amounts are small since they target people who aren’t use to save, but if you are entitled to one, try to enjoy the free match!
What else should savers max out in 2013?