subject: Better Income Planning With Retirement Savings Accounts In 2011 [print this page] One of the best income planning tips that will enable you to save more money for the future is maxing out contributions to your retirement savings accounts to obtain maximum employer matches and increased retirement savings. Many workers who could very well use the boost of substantially larger retirement distributions do not contribute enough to a 401K, for example, to qualify for the largest matching contributions from an employer. Although the market crash and its overall effects on the average worker are partly to blame, financially unstable workers (as well as moneyed pre-retirees) still need to periodically reassess their savings accounts and other venues for saving and earning, as opposed to ignoring their options.
Today, IRAs and employer-sponsored 401K plans are still a viable retirement investment, as these provide secure returns based on compounded interest, sizeable employer matches, and the tax benefits that come with these retirement savings plans. Contributions and use of these accounts should be optimized based on 2011 limits so workers who save money today can expect increased funds and chances at retirement security when they finally quit the workforce.
There are numerous reasons why you should think about adding to your retirement income with larger contributions to your 401K and other savings plans for retirement. First, there were no rule changes and limit changes to 401Ks in 2010, and none are expected for the coming year. This is due to the fact that there were no substantial shifts to the rates of inflation, which may supplement your ability to put more money aside for account contributions, in turn, because of less investment loss. New retirement legislation, such as that which emphasizes the benefits of rolling over Roth IRAs, can also be seen as extra incentive for retirement savers in the coming year.
New legislation and policies provide older workers with the increased ability to save for their golden years. These rules also allow these people to retain more of their money via the opportunity to implement various strategies to decrease the tax burden on contributions and distributions - especially important if taxes increase in the future (or when the Bush tax cuts expire). The sluggish markets and various predictions may keep the inflation rate hovering around 2% for some time, which may not seem noteworthy, although this can result in proportional increases to retirement account contribution limits (and thus, larger employer matches and overall retirement account balances) in the future.
by: Katherine Smith
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