Other troubling figures showed that 48% of non-retirees do not believe they are saving enough money to live "the lifestyle they want" in retirement. The number jumped to a whopping 71% of those in their 50s. To add the disappointing news, the survey found that 34% of middle class Americans do not currently saving money for retirement.
Where can I save money for retirement?
Saving for retirement requires some discipline and, perhaps, the sacrifice. That said, there are now ways to save that can help you tremendously in the future, especially for those who start early. Three of retirement savings options the most popular:
401 (k): If your company offers, saving money in a 401 (k). The money you contribute is until you start to withdraw a tax deferral. This means that if you make $ 50,000 per year and save you $ 5,000 in a 401 (k), your taxable income drops to $ 45,000. If your company matches your contribution, usually up to 6%, make sure you save as much as you can afford so that you can make the most of this benefit for employees - it is essentially free money. You can now contribute up to $ 17.500 per year, or $ 23,000 per year for 50 years or more. The money you save will grow with compound interest over the years to start as early as possible.
IRA: If your company does not offer a retirement plan, do not worry because you can still save on your own. A good option for you can be an individual retirement arrangement, better known as an IRA. Contributions to an IRA are before tax, similar to a 401 (k), which means you will have to pay taxes on it when you withdraw from the account. You can contribute up to $ 5,500 per year or $ 6.500 per year if you are over 50 years
Roth IRA: This type of account is similar to an IRA, to excluding contributions are after tax, which means that you will not get a break on your current tax bill. If you make $ 50,000 a year and you contribute $ 5,000 to your Roth IRA, the total amount of your taxable income still his. There is a huge increase, however. Any money you withdraw from the account, including interest, is tax free! You can save thousands of dollars over the life of the fund by choosing not to defer your tax liability from the start. Keep in mind that if you dip into this account before you are 59½, you may have to pay a 10% tax, as part of a penalty for early withdrawal.
But if is really hard for me to save money?
Most of the above detailed accounts require some sort of minimum deposit to open (usually around $ 5000). If you do not already have the money saved or you are not sure how to start saving, then you may need to take another route. It is suggested that you should save 10% of your gross income to make sure you have enough money for retirement, but in the beginning you should try to save all you can afford, even if it is only few dollars a month.
One of the best ways to start saving is to store your money in a savings account. Whatever the route of savings you decide to take, you should consider putting your money in an online savings account. Unlike savings accounts in banks of brick and mortar, many online savings accounts have a zero or low maintenance. In addition, online accounts offer savings rate more than 10 times higher than traditional savings account. Note that a savings account should never be used to replace a retirement account, but it is a fantastic way to save money and learn sound financial practices.
Visit our online savings account reviews to see which account is best suited to your needs.