3 essential tasks to accomplish before the end of the year

Preparing for retirement is something you should be working on throughout your life. This is because spreading the work out over the years will make it more manageable, but also because there are tasks you need to do each year to get you on the path to financial security in your later years. .

With 2021 drawing to a close, it’s time to make sure you’ve ticked these three tasks off your to-do list so that you can get on track (or stay on track) towards a secure retirement.

1. Check your social security income statement

Social Security will be an important source of income when you retire, so you want to get all the benefits you deserve. You can only do this if your income record is correct. This is because your benefits are based on the average salary over the 35 years that your income was highest (when adjusted for inflation).

You should check your income statement annually to make sure that you are getting full credit for the money you paid Social Security taxes on. If there is an error in your report, you will want to correct the record as soon as possible while you still have documents to prove how much you earned so that you don’t end up with less profit than you deserve.

So if you haven’t already verified your income this year, it’s time to log into your mySocialSecurity.gov account and do it. If you find any mistakes, act now to correct them and give your benefits a boost.

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2. Contribute enough to your 401 (k) plan to maximize employer suitability

Social Security alone will not be enough for you, so you will need investment income. For many people, the best way to ensure a large enough nest egg to supplement Social Security is to invest in a 401 (k) plan at the workplace (or a 403 (b) plan if it is. plan proposed by your employer).

Putting money into a 401 (k) saves you employer correspondence with most businesses. This free money can make a big difference in the final size of your retirement nest egg. In fact, for the average American, the employer match alone could be worth about $ 333,000 over the course of a career. Earning the full amount of matching funds goes a long way in enhancing retirement security.

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Your employer usually only makes a certain percentage of contributions each year, and unfortunately if you give up that matching money in a year, you lose that opportunity forever. So if you haven’t gotten your full employer equivalency in 2021 yet, contribute as much as you can to your 401 (k) over the next month to try and do so. Make sure you understand your employer’s rules regarding the amount for each pay period, as it may not be possible to get the full game at this stage of the year.

Even if you can’t make every dollar in matching funds now, try to make the most of it by the end of 2021 – and start planning now to maximize that match in 2022 to avoid losing money. free retirement money.

3. Get as close as possible to the maximum of your tax-advantaged retirement plans

You can also get help with Uncle Sam’s retirement savings if you contribute to tax-advantaged retirement accounts. These can include not only a 401 (k), but also a Roth or a traditional IRA.

Although 401 (k) contributions must be made by the end of the calendar year, you have until tax day to contribute to an IRA for the 2021 tax year. This could be in April or in October if you request an extension. Still, it’s worth trying to get as close as possible now to maximize these accounts if you are eligible for them. Getting all of your contributions this year gets you started working towards getting the full 2022 tax breaks early in the year.

By claiming all the tax savings you can and earning as much as possible from your employer, you will be able to increase your investment account. And by checking your Social Security record, you can make sure your retirement checks from this source are as important as possible. Since Social Security and savings are likely to be your two main sources of retirement income, doing all you can this year to strengthen both is worth it.

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