Whether you plan to retire early, late, or not at all, having enough money saved can make all the difference in the world. The last decade before you retire can be especially crucial, making this a great time to do some financial planning. If you find that you’re coming up short, you’ll still have time to make adjustments. If you discover that you need to put more money away, here are four time-honored retirement savings tips.

1. Fund Your 401(k) to the Max

If your workplace provides a 401(k), 403(b), or 457 plan, it’s a prime opportunity to maximize your contributions, especially if you haven’t already done so. These plans offer a straightforward way to invest automatically, with the added benefit of potentially deferring taxes until retirement. This tax deferral is particularly advantageous for individuals in their 50s and early 60s, who are likely earning more now than they anticipate in retirement, thus facing lower tax rates later. While Traditional 401(k)s offer tax deferral, a Roth 401(k) option, if elected, means paying taxes upfront but enjoying tax-free withdrawals later. Keep in mind that contribution limits are adjusted yearly for inflation, with those under 50 allowed a maximum contribution of $23,000, and individuals aged 50 and older eligible for an additional catch-up contribution of $7,500, totaling $30,500.

2. Rethink Your 401(k) Allocations

As you approach retirement, it’s essential to reassess your 401(k) allocations to align with your changing financial needs and risk tolerance. While traditional wisdom suggests a shift towards more conservative investments such as bonds, it’s crucial to maintain a balanced portfolio that includes both stocks and bonds. This strategy not only safeguards against potential losses in a downturn but also preserves growth opportunities offered by stocks. However, the extent of this adjustment should be tailored to individual preferences and circumstances. Unfortunately, many individuals find themselves with significant sums in their retirement plans without proper guidance on how to optimize their investments. If you’re in this situation, we offer complimentary consultations to help you navigate this important aspect of retirement planning.

3. Tax Diversification

As you tote up your retirement savings, remember that not all that money is yours to keep. When you make withdrawals from a traditional 401(k)-type plan or traditional IRA, the IRS will tax you at your rate for ordinary income. So, if you’re in the 22% bracket, for example, every $1,000 you withdraw will net you just $780. With this in consideration it’s important to have money saved up that won’t be taxable when withdrawn. A potential solution is adding a Roth IRA to the mix. Roth contributions aren’t tax-deductible, the taxes on that money will be paid in that year however, building up assets in a Roth IRA allows retirees to better control their taxes during their retirement years and can really help reduce their overall tax rate in retirement. Your income determines whether you’re eligible to contribute to a Roth. The allowable contribution is reduced in steps through an income range, reaching zero at the top of the range. The numbers are adjusted yearly. For the 2024 tax year, the income phase-out range for taxpayers making contributions to a Roth IRA is between $146,000 and $161,000 for singles and heads of household. For married couples filing jointly, the range is $230,000 to $240,000. Note, too, that married couples who file their

taxes jointly can often fund two IRAs, even if only one spouse has a paid job, using what’s known as a spousal IRA.

4. Know What You Have Coming to You

Traditional Pensions

If you have a defined-benefit pension plan at your current employer or a previous one, you should receive an individual benefit statement at least once every three years. If you are a participant of The Department of Retirement Systems for Washington State, you can log into your account at www.drs.wa.gov and use their benefit estimator to get a good idea of what your pension is worth at your desired retirement year.

It’s also worth learning how your pension benefits are calculated. Many plans use formulas based on salary and years of service. So, you might earn a bigger benefit by staying in the job longer if you are so inclined. Integrity Wealth Advisors has extensive experience in helping our clients understand their pension plans, we are eager to help anyone who may have questions regarding their benefits.

Social Security

Once you’ve contributed to Social Security for 10 years or more, you can get a personalized estimate of your future monthly benefits by logging into your account at ssa.gov. Your benefits will be based on your 35 highest years of earnings, so they may rise if you continue working. Your benefits will also vary depending on when you start collecting them. You can take benefits as early as age 62, although they will be permanently reduced from the amount you’ll receive if you wait until your full retirement age (currently 66 or 67 for anyone born after 1943). You can delay receiving Social Security up to age 70 to get the maximum benefit.

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