{"id":11042,"date":"2023-09-20T15:33:31","date_gmt":"2023-09-20T15:33:31","guid":{"rendered":"https:\/\/www.johnsonfistel.com\/?p=11042"},"modified":"2023-09-20T15:42:06","modified_gmt":"2023-09-20T15:42:06","slug":"supercharge-your-retirement-account-5-strategies","status":"publish","type":"post","link":"https:\/\/www.johnsonfistel.com\/supercharge-your-retirement-account-5-strategies","title":{"rendered":"Supercharge Your Retirement Account \u2013 5 Strategies"},"content":{"rendered":"\n

This article is reprinted with permission from Esq. Wealth Management, Inc.<\/a><\/em><\/p>\n\n\n\n

Whether you\u2019re approaching retirement or planning for the years ahead, it\u2019s crucial to take proactive steps to fortify your financial future. In this article, EsqWealth shares five quick strategies tailored to individuals with substantial assets, designed to maximize your wealth accumulation as you prepare for retirement.<\/p>\n\n\n\n

1. Maximize tax-advantaged contributions<\/h2>\n\n\n\n

Get the most out of your savings by maximizing tax-deferred contributions to your IRAs and 401(k) plans. In 2023, you and your employer can contribute up to a total of $66,000 to your traditional 401(k).[1]<\/sup><\/a> If you don\u2019t have a 401(k) or want to save more, you can contribute $6,500 to an IRA.[2]<\/sup><\/a><\/p>\n\n\n\n

2. Take advantage of catch-up contributions<\/h2>\n\n\n\n

If you are over age 50, you can exceed the standard annual contribution limits of your IRA and 401(k) accounts. This allows investors close to retirement to supercharge their savings, putting away more tax-deferred funds for the future. In 2023, you can use catch-up contributions to put away an additional $1,000 in your IRA and an additional $7,500 in your 401(k).[3]<\/sup><\/a><\/p>\n\n\n\n

3. Explore your HSA investment options<\/h2>\n\n\n\n

If you have a high-deductible insurance plan you can use an HSA to set aside pre-tax funds to spend tax-free on deductibles, co-pays, and other qualified medical expenses either now or in the future. If you\u2019re single, you can deposit up to $3,850 each year into your HSA, and up to $7,750 for family coverage for your spouse and\/or children.[4]<\/sup><\/a><\/p>\n\n\n\n

HSA account holders can invest the funds in stocks, bonds, mutual funds, or ETFs, but only a small fraction take advantage of this option. According to a study by the Employee Benefit Research Institute, only 9% of HSA account holders currently invest their funds\u2014everyone else is keeping their HSAs in cash.[5]<\/sup><\/a><\/p>\n\n\n\n

Investing allows your HSA funds to potentially grow over time. That can provide extra funds for health care costs now, and, after age 65, you can make taxable withdrawals from your HSA for any reason without penalty. Explore your HSA investment options with your financial advisor to maximize the potential of your HSA funds after you\u2019re no longer working.<\/p>\n\n\n\n

4. Consider a Roth conversion<\/h2>\n\n\n\n

Roth IRA contributions are limited by how much you make. For the 2023 tax year, you can only contribute the maximum if your modified adjusted gross income (MAGI) is less than $138,000 ($218,000 if you\u2019re married filing jointly). Beyond this income threshold, your contribution limit is decreased until it phases out entirely at $153,000 for single filers, or $228,000 for joint filers.[6]<\/sup><\/a>  <\/p>\n\n\n\n

If you make too much money to fund a Roth IRA, you may be able to roll over funds from your traditional IRA account or from a 401(k) account to a Roth IRA to provide a bucket of tax-free income you can draw from when you retire. If these contributions were initially made pre-tax, when you roll the funds over to a Roth, you\u2019ll have to pay taxes on them. From there, they can grow tax-free, and you won\u2019t pay taxes on them when you make withdrawals.<\/p>\n\n\n\n

Understanding the tax implications of a Roth IRA conversion becomes straightforward when you have only one traditional IRA. However, if you hold multiple IRAs, the process can become more intricate due to the IRS\u2019s pro-rata rule. This rule necessitates the inclusion of all your traditional IRA assets in the calculation, encompassing IRAs funded with both pretax (deductible) and after-tax (nondeductible) contributions. Consequently, you\u2019ll be required to pay taxes proportionate to the original account\u2019s pretax contributions and earnings, adding a layer of complexity to the conversion process.<\/p>\n\n\n\n

5. Assess your annuity options<\/h2>\n\n\n\n

If you still have retirement money to invest after you\u2019ve maximized your 401(k) and IRA options, an annuity may be suitable. An annuity is an insurance product that you can purchase with a lump sum of cash or a series of payments. Depending on the specific annuity, you may be able to access market upside while also guaranteeing a level of income in retirement.  In May of this year, EsqWealth prepared an article about how annuities can be a powerful tool for retirement planning and a recession hedge.[7]<\/a><\/p>\n\n\n\n

You have numerous avenues available to optimize your savings and secure a comfortable retirement income. Recognizing that each individual\u2019s financial circumstances are distinct, EsqWealth encourages you to get in touch with us should you have any queries or apprehensions regarding your particular situation. Together, let\u2019s ensure that your wealth is strategically managed to serve you impeccably during your retirement years. Your financial well-being is our priority.<\/p>\n\n\n\n

Sources<\/strong><\/p>\n\n\n\n