Not happy with the progress you are seeing in your retirement savings? Or are you looking for new ways to keep the momentum going? As markets fluctuate, laws change, and taxes inevitably increase, it is more apparent than ever before that American’s need to employ every advantage at their disposal to reach their retirement goals.
Below are 5 options that investors have used help boost their progress toward financial freedom.
Tax-Free Savings
Can you imagine the bliss of a life without the burden of paying taxes on your hard-earned money? Living a tax-free life in your golden years does not have to be a dream, you can make it a reality with a Roth IRA.
The Roth IRA is one of the greatest gifts that the government has ever given you. Use it to your advantage!
It’s not too late to convert your IRA to a ROTH! Read our most popular whitepaper to see that Roth IRAs don’t have to be a young person’s game. Ready to convert your current IRA or old employers 401k to a Roth IRA, learn how to complete a conversion with Preferred Trust Company.
Tax-Shelter Business Income
As a small business owner, there are very few reasons why you should not be taking advantage of the benefits provided by retirement accounts tailored with you in mind, like the SEP IRA. With a SEP IRA, you can:
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Defer taxes for the lessor of – 25% of compensation or a maximum of $66,000 in contributions for 2023 ($61,000 for 2022).
This contribution limit is significantly greater than the $6,500 maximum for a Traditional IRA ($6,000 in 2022). Need we say more? Read our blog for more information about how to manage a SEP IRA. If you are ready to start generating savings for your business and your retirement you can easily apply online on our website today!
Diversification
No one wants to see their retirement savings derailed by a certain investment, but no one has a crystal ball to predict the future performance of their investment choices. So, how do retirement savers help mitigate that risk? One word – diversification.
The goal of diversification is to help mitigate substantial losses in your portfolio should a specific investment, asset class or sector suffer a loss. Diversification also provides your retirement portfolio with the potential to still experience growth even when other portions of your portfolio decline or experience a correction.
Is your portfolio truly diversified if you are only invested in two different assets? Your portfolio should look something like an ice cream shop with a myriad of flavors to “scoop” from (generate returns on) for tax-sheltered growth.
What happens if your ice cream shop only has two flavors to scoop from - let’s say 75% stocks and 25% gold? If one of those flavors experiences a shortage (i.e., your stocks experience a market correction), then you won’t be able to scoop 75% of your ice cream to build your retirement savings. The other 25% of your other flavor may not be enough to counterbalance the potential losses.
If you are unsure what other investments might be the right flavor to balance your retirement portfolio, take a look at our Resources page as a great place to start! If you don’t have a vehicle to tax-shelter your diversified investments in cryptocurrency, real estate, etc., schedule a no obligation consultation to discuss how an IRA account with Preferred Trust Company can help you achieve your retirement goals.
Contribute Often
Making your annual contributions can help you in a variety of different ways.
Do you ever get that feeling that Tax Day is going to be a bloodbath?
Well, if you have a tax-deferred IRA account (i.e., Traditional, SEP or SIMPLE) at Preferred Trust Company, you can make your annual contribution. Depending on your modified adjusted gross income (MAGI), your contribution can be deducted to help alleviate some of your tax liability.
Have you heard of the contribution "sweet spot"?
It's the time between the start of the new year and the tax filing deadline when IRA account holders can make contributions for both the previous and current tax year. For example, during the 2022 tax season, clients that took advantage of this time period, combined contributions up to $12,500 (max contributions for tax year 2022 & 2023).
This could be the quick infusion of liquidity that helps you fund your next investment! Additional investments can help grow your tax-sheltered returns that can be compounded into more savings. Keep the cycle momentum going!
The quickest and most secure method to contribute is to access to your online account portal and complete the Contribution Form via E-Sign. Direct deposit from your checking or savings account makes contributing to your IRA seamless.
Preserving Principle
A lot of effort and strategizing is often given to building the retirement nest egg. However, many lack the foresight to strategize how are they going to ensure their nest egg lasts through their retirement years and leaves a legacy for their loved ones.
Once people retire, they typically park their funds in less risky investments (if at all) that provide a minimal yield that is not enough to cover the amount of their withdrawals. This means they will mostly be drawing-down their principle.
There are investments options that can provide a steady flow of either interest or dividend income that is enough to help mitigate the quick depletion of your nest egg. A great example of this is discussed in our whitepaper, “Income and Inheritance”.
If you have any further questions or would like to deploy one of these 5 strategies with an IRA account at Preferred Trust Company, give us a call at 888.990.7892 or email us at info@ptcemail.com.
