Are you on track to save enough for retirement in 2019? Is your 401(k) invested properly? Are you taking full advantage of the tax-advantaged retirement savings tools at your disposal? Here's what you should know about these retirement savings topics, along with a few other tips, as you plan your retirement savings strategy in 2019 and beyond.
Contribute enough to get your employer's match
About 20% of Americans are making a terrible retirement mistake by not taking advantage of their employer's matching contributions. Choosing not to contribute enough to get the full match is literally turning down free money.
One common culprit is 401(k) plans that auto-enroll new employees, which is typically done at a low contribution rate. For example, if your employer is willing to match contributions of as much as 5% of your salary, but you're auto-enrolled at a 2% contribution rate, you're leaving a lot of money on the table unless you make the effort to adjust your contributions.
Getting the match isn't enough
Contributing as much to your 401(k) or 403(b) plan as your employer is willing to match is a good start, but it's by no means enough. Many financial planners, including myself, suggest saving at least 10% of your compensation in tax-advantaged accounts for retirement — not including any matching contributions your employer makes on your behalf.
This doesn't necessarily mean you need to contribute 10% of your salary to your 401(k). Once you've maxed out your employer match, it could be a smart idea to open an IRA if you qualify. An IRA gives you the flexibility to invest in virtually any stocks, bonds, or funds you want with your retirement savings. Traditional IRAs have the same tax benefits as pre-tax 401(k) contributions, and Roth IRAs allow you to avoid paying taxes after you retire.
Full article at MotleyFool
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