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Am I Doing Enough for My Financial Future?

Do you lay awake at night worrying about your financial future? Even the most attentive investors may be concerned they’re not saving enough.

Man examining paperwork.

You may be a whiz at maxing out your IRA or a pro at meeting your company’s 401(k) match, yet still feel like this may not be enough. Being unsure about retirement strategies can be natural. But sometimes, worries without a plan do more harm than good. If you are concerned about choosing the right retirement tactics or how much you should save, read on to determine what more you might do.

Are You on Track?

Find out if your retirement strategies are helping you stay on track by using a retirement calculator. While everyone’s finances are different, determining if you’re likely to meet your savings goals can be a helpful way to determine if you are on target. Wondering how you stack up against your peers? Look into retirement strategies by age.

Have You Maxed Out Your IRA?

Traditional and Roth IRAs can offer tax advantages on your contributions. They can be a sensible way to put money away for retirement, even if you have an employer-sponsored retirement plan.

Choosing between a traditional vs. Roth IRA will depend on the individual, but putting money aside in either can be an essential part of a retirement strategy.

Tax Fast Facts

If you qualify for an IRA, you can invest up to $6,500 in 2023.

Are You Taking Advantage of Company Matches?

Another option is to check into your employer’s retirement plan.

Some, but not all, employers will offer benefits such as 401(k) matching. That means your company may match your contributions up to a certain percentage annually. If you can meet your company’s “match,” that is additional money going into your retirement account.

Taking advantage of a company match can be a convenient way to help boost your retirement contributions.

Is High-Interest Debt Gone?

You also should think about knocking out existing, high-interest debt.

High-interest debt includes credit cards and personal loans where the interest rate is much higher than an expected return you might get by investing in the market. For example, at the end of the first quarter of 2022, the average credit card interest was over 16%.* And investor's expectations regarding retirement account returns are generally lower than this.

That means that if you are carrying high-interest debt, you may be losing money in the long term if you do not pay it off sooner. If you make regular retirement contributions but carry high-interest debt, consider paying it off aggressively.

Investing in an HSA?

Once you set up investment accounts and pay down debt, it’s time to consider an HSA.

Health Savings Account (HSA) is typically offered with a high-deductible health plan. While an HSA can help you cover today’s health care costs through a pre-tax deduction from your paycheck, it can also be used as a retirement vehicle for the long term. It’s may be a good choice, especially if you’ve maxed out your 401(k) and need additional savings.

Plus, when you reach age 65, you can withdraw funds penalty-free for any expenses. And like an IRA, it will be taxed as income. It’s may be a good choice, especially if you’ve maxed out your 401(k) and need additional savings.

Reasons to Consider an HSA
  • Investing options may be available, potentially helping to grow your money.

  • Three tax advantages: tax-deductible contributions or pre-tax in an employer’s plan, no taxes on interest or dividends and tax-free withdrawals for qualified medical expenses.

  • HSAs can go with you from job to job, and you can keep contributing as long as you have a high-deductible health plan.

  • Your employer may also add a contribution to your HSA.

Investing in Stocks, Bonds, Exchange-Traded Funds?

If you are making full use of tax-advantaged retirement accounts, it may be time to examine your brokerage account. Is there a place for individual securities or different investment vehicles in your financial strategy?

A Retirement Plan Helps

While worrying about retirement savings may keep you up at night, remember to focus on what you can control. That can be creating a financial plan, making sure your portfolio is diversified and talking to an expert when needed.

Making knee-jerk reactions to the market’s ups and downs may muddle your long-term strategy. Developing a thoughtful plan may help put the emotions of volatility in perspective.

If you are unsure how to move forward, please work with one of our financial advisors to help balance your portfolio with annual check-ins to review your strategy. And you may even sleep a bit better knowing you have a retirement plan that fits your needs.

Need Help With Your Retirement Strategy?

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Source: The average credit card interest rate was 16.26% as of the week of March 30, 2022, by Bankrate.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.