Four Ways to Plan for Retirement Right Now

Add to Your 401(k)

Your 401(k) is set up to allow you to start putting money in it that will grow, tax-deferred. How funds are invested may be limited due to administrator policies, but you can still start contributing funds now. The contribution limit for 401(k) plans as of 2017 is $18,000 for those under age 50, and $24,000 if you’re over 50. Check out your employer’s (and administrator’s) guidelines for employer match policies. Make sure you donate enough to have it matched (up to an extent, usually around 3 percent) by your employer, if possible. The contributions allotted via employer match policies are also not taxed. However much you provide, it will grow until you need it for retirement, so consider investing now.

Get a Whole Life Insurance Policy

Most people decide upon term life insurance policies, because they’re cheap, but if you feel you can afford it, opt for a whole life insurance plan. With a term policy, you pay a certain amount for a fixed period of time (up to 30 years, usually). If you die during the period, your beneficiaries receive compensation. If you survive the period, you simply owe the cost of premiums because the term policy has no innate value. With a whole life policy, you have permanent insurance- it doesn't disappear. Subsequently, premiums are more expensive, but its value builds by growing in account without taxation. You can borrow against the policy, and if interested, you can even cash in. This is a great way to create a nest egg that could turn into a luxurious retirement lifestyle or a bucket list realized.

Play Real Estate Mogul

Investing is a good (albeit risky) way to save money for retirement. Investing in real estate is even better, because you won’t pay taxes on appreciated real estate until you sell it, and even then, it is possible to be exempt from a large percent of taxation. You can subtract the gain from the sale of your home so long as you’ve lived in it for two of the five years before the sale. You can exclude up to $250,000 if you’re single and $500,000 if you’re married and paying taxes together. If the property isn’t your primary residence (i.e. a second or vacation home), you can’t exclude the gain, but instead of exemption, it can be deferred, meaning you won’t pay taxes until you sell it. Renting out the property is also a good tax strategy. If you rent out the property for less than 15 a days a year, you aren’t required to report the income achieved by renting.

Pad Your Health Savings Account (HSA)

While a health savings account is obviously intended for health, if you don’t get sick or require medical care often, you can use it to provide for your retirement. This is done by adding pre-tax contributions to your HSA from your paychecks- in some cases, your employer might opt to contribute as well. Employer contributions are not classified as income, so they’re tax free (your two new favorite words). An HSA is transferrable, so it will not only stay the same but continue to prosper, even if you switch professions or retire. And you can be sure it will continue to grow, untouched by federal taxes.


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