Maximize Now, Enjoy Later

More than a quarter of U.S. workers say they’re not at all confident about their ability to afford a comfortable retirement. According to an Employee Benefit Research Institute report, that statistic has reached its highest percentage in two decades. How confident do you feel?

The financial planning experts at the New Jersey Society of Certified Public Accountants (NJSCPA) say the most important aspect to your retirement is to have a plan and to have it sooner rather than later. Take the time now to plan for retirement, then monitor your investments so you’ll feel confident, rather than apprehensive, about your future. Small changes now make a big impact in the long run.

Top 10 Retirement Tips from CPAs

1. Start saving. Now. Americans have one of the lowest personal savings rates compared to other countries, and in difficult economic times, retirement tends to fall by the wayside. This is one time you don’t want to be a part of the crowd. Boost your savings rate and put it toward your retirement.
   
   
2. Control debt. Pay down your debt, free up your funds, and then use those funds to invest in your future. The less money you owe, the more money you’ll have to invest for the long haul.
   
   
3. Treat your future like an investment. Monthly bills, your children’s college education, the mortgage – it’s easy to get caught up in the day-to-day cost of living. But pay yourself – your long-term self – first, and consider your investment in retirement a non-negotiable payment that must be made each month.
   
   
4. Automate. Out of sight, out of mind has never been more applicable. Have retirement savings deposited directly into your investment accounts. If you never see it, you’ll never spend it.
   
   
5. Maximize. Regardless of which investment vehicles you choose for your retirement savings – 401(k), traditional IRA, Roth IRA, etc. – maximize the amounts you can invest each year. Contribution limits change periodically, so ask your investment advisor to help you determine the appropriate amounts for your age and income.
   
   
6. Minimize. The less you spend now, the more you’ll have to spend later. If you’re having trouble finding the money to invest, develop and stick to a budget to find the all-important funds to stash away.
   
   
7. Match. If your employer offers 401(k) matching, take advantage of it. It’s like free money. And who doesn’t love free? You could increase your investment without lifting a finger.
   
   
8. Diversify. Remember, don’t put all of your eggs in one basket. Tax deferred accounts aren’t the only route to retirement. Whether you choose to invest in real estate, stocks, bonds, etc. plan to diversify your investments to minimize the effects of economic ups and downs.
   
   
9. Evaluate. Once you’ve got a plan in place, don’t sit back and cool your heels until retirement. Your investments need constant supervision to make sure you’re on track and achieving your goals.
   
   
10. Contact a CPA. Feeling like you’ve waited too long to start planning? Don’t panic, but do contact a financial planning expert immediately to make a plan.

Which Investments Are Right for Me?
There are several different types of retirement accounts to choose from. For example, IRAs and 401(k)s provide you with a way to set aside money on a pre-tax basis. With the IRA and 401(k), you have to pay taxes on the money only when you retire and make withdrawals. The Roth IRA and Roth 401(k) allow you to save money on an after-tax basis. With the Roth accounts, you will have no tax liability on withdrawals once you reach retirement age. Your age, income and estimated future tax rate will all factor into which investments are best for you.

A CPA Can Help
"The earlier you start planning for retirement, the better off you’ll be down the road," says, Ed Mendlowitz, CPA, a principal with WithumSmith+Brown in New Brunswick.

"But if you haven’t already put a long-term plan in place, you can still make an impact on your financial future."

If you have questions about planning for retirement, a CPA can help. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.