While you are accomplishing spring cleaning in your house, you may also want to take a look at your retirement plan. Finances need seasonal cleaning too! It is a great time to review your savings, check your progress, and set new goals. Periodically looking over your retirement plan to ensure you are still on track is crucial for reaching your retirement goals. Continue reading for steps to take while spring cleaning your retirement plan.
Look at your Debt
What do you have debt in? Are you still paying off student loans and credit card debt? You want to pay down your high interest debt first to eliminate your bad debt. You can wait to pay off your mortgage that is sitting at a low rate. It is smart to have a goal of being debt-free in retirement since you will be living on a fixed income. Check your monthly payments to see if you can make any modifications to pay off your bad debts faster.
Start tracking your spending
How much are you spending each month? Do you know how much you are spending on unnecessary items? Analyze your monthly spending and create a budget to minimize unnecessary spending. You will also be able to eliminate subscriptions you do not use anymore to reduce spending. Creating a budget will help you pay down debts quicker and save more money.
Max out your contributions
You can still contribute to your 401K and IRA accounts through April 15th, 2021 that can be deducted on your 2020 tax return. Hit your contribution limits if possible to not only receive a tax break, but set yourself up for retirement.
Set up automatic retirement plan payments
By making your monthly contributions automatic, you do not have to worry about making that payment each month. It also ensures you do not miss a month’s payment. Consistent payments and contributions are necessary for your retirement savings to grow.
Consolidate 401k plans
Do you have 401k accounts from old jobs? You can benefit from having all of your 401k contributions in one account so you can invest all of that money with new ideas. You may be able to roll over your 401k accounts into one you already own or into a new IRA.
Think about your retirement
What age do you want to retire? What type of lifestyle do you want to have in retirement? What debts and expenses do you plan on having? These questions and more allow you to decide how much money you need to have saved up to retire. Based on this number, you can figure out how much you need to be saving per month to reach your goal.
Talk to an advisor
A financial advisor will be able to give you professional advice about your retirement savings goals and if you are on the path to reach your goals. It is extremely beneficial to make sure you are making the correct financial maneuvers to set yourself up for retirement.