If you desire to be financially independent in retirement, now is the time to start supercharging your savings.  There are numerous investment strategies available to you that help to maximize the growth of your nest egg while also minimizing your tax obligations, thereby ensuring that you get the best bang for the bucks that you set aside.

Below are several pointers aimed at enhancing your financial position in retirement! 

1. Take advantage of the “Catch Up” clause. Depending on your age, you may qualify to make extra IRA or 4019(k) contributions.  Once you’ve eclipsed the 50-year-old mark, you are able to tack on up to $6,500 more annually to your 401(k) plan, for which the standard maximum is $20,500 in 2022.  And if you’re looking to boost your IRA contribution, you can add on an extra $1,000 each year.
   
   
2. Consider the pros of a Roth conversion. For a lot of folks, converting a traditional IRA to a Roth IRA makes a lot of sense from a tax-advantage perspective.
   
   
   • Roth IRA contributions are considered post-tax, which means that you have to pay income taxes on the front end, prior to depositing the funds into the Roth. However, once you’ve bitten the bullet at the contribution stage, any growth from that point forward is tax-free, as are your distributions in retirement, if your Roth has been open for five years or longer.
     
     
   • Another advantage is that a Roth IRA does not obligate you to make distributions at any point. That’s another feature that sets it apart from a traditional IRA, which stipulates that you must take required minimum distributions, or RMDs, once you’ve reached a certain age.  Thus, the growth potential of a Roth – even for your beneficiaries, who can inherit your Roth tax-free – exceeds that of a traditional IRA.
     
     
   • Roth IRAs are particularly beneficial for people who anticipate being in a higher tax bracket later in life. For example, if you’re young and just getting started in your career, you may want to convert that traditional IRA to a Roth.  Sure, you’ll have to pay a little bit more in taxes now, but long-term you’ll be avoiding a much greater tax burden.
     
     
3. If applicable, explore self-employed retirement options. The tax-advantaged savings potential for the self-employed is substantial.  As of this year, self-employed individuals can set aside up to $61,000 for retirement annually (or $65,000 with the catch-up clause), which takes a big chunk out of your taxable income.  Keep in mind, though, that self-employed retirement plans range widely and can be pretty complex.  Be sure to do your homework, and if needed, consult with a tax advisor to fill in any knowledge gaps.
   
   
4. Keep an eye on the clock. Don’t let the year get away from you before maxing out your retirement savings.  If you’re in the final quarter, and you realize that you still have a way to go before hitting your contribution limits, do the best you can to get there: if possible, up your elective deferrals to your 401(k) for several months; invest a little bit more each month into your IRA.  Don’t underestimate the value of time in optimizing your savings potential – and be willing to make the marginal short-term sacrifices in light of the long-term gain.

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   Today is a great day to start strategizing for your retirement.  And Independent Bank would be delighted to assist you in your journey.  We welcome you to visit us at any one of our locations to learn more about the various deposit accounts that we offer – including IRAs! – and we invite you to connect with Independent Wealth Management for trusted guidance on financial planning.

   Tax savings, investment growth, and financial independence lie ahead – all that’s left to you is to begin!

    

   *Important Note:  Be sure to connect with your tax advisor or financial planner to ensure that the figures cited above are still up to date.  In the world of IRAs and qualified plans, changes occur frequently!*