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Your retirement might be closer than you think
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Pinterest Reddit. ET Online. ThinkStock Photos. Nav as on 27 Sep Things You should consider Annualized Return. By Deepali Sen The overall objective of financial planning is to prepare the client for any of the two possibilities; of passing away too early or living too long.
This article is going to focus on the latter possibility.
Retirement is real. It is a glaring fact.
It will hit all of us at some point in time. In addition, it is much closer than it may appear.
All of us would rather have our money outlive us rather than the other way round. Not much thought has gone into inflation , medical expenses or longevity. By putting money in your Traditional k plan, you reduce your taxable income for the purposes of federal income taxes. Also, by putting your money in that plan, you qualify for any matching contributions your employer may offer.
Related: How much house can you afford? To get that match, though, you first must contribute your own money. You have the opportunity to potentially double your money for up to as much as your employer will match, though you might be able to contribute more to your plan to build your wealth that much faster. Related: How much will that college really cost? When you get your W2 from your employer to file your taxes, your wages in Box 1 will be reduced by the amount you contributed to your Traditional k.
Your retirement might be closer than you think - The Economic Times
By lowering that starting point for your income, your taxes are reduced compared to what they'd be if you hadn't contributed to your k. Related: When will I be debt free? While those three steps are enough on their own to potentially enable you to double your money, making an initial investment in the plan is just the first stage of building your wealth. Once it's socked away, it needs to be put to use in a way that it can potentially increase in value for you. Typical k plans only allow you to invest in mutual funds or exchange-traded funds. Even with those restrictions, you may very well have some great options to choose from.
Related: How fast will my savings grow? As you get closer to retirement, it becomes important to shift the money you'll need to spend in the next few years into shorter term assets with higher certainty than stocks. You'll be giving up the higher potential returns that stocks offer, but you'll have a greater chance of that money actually being there when you need it.
Government bonds with one- to five-year maturities and also carries a minuscule 0.
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Very few investments in life offer you the potential to double your money as easily as you can by investing in your Traditional k , accepting your employer's match, and watching your contribution reduce your taxable income. If that opportunity is available to you, the sooner you start taking advantage of it, the more quickly it can help you build your nest egg.tumbremarrepi.tk