In a year when a pandemic is raging, unemployment is high, and sanity is low, putting money into your retirement is probably the last thing on your mind. But with the end of the year on the horizon, you don’t want to miss the opportunity to claim a tax break for funding your 401k or IRA because you want to do everything you can to lower your tax liability.
On the other hand, the nationwide financial struggles during 2020 might leave you wondering where you’ll find the money to invest in your retirement. In fact, you might give up on the whole idea of investing this year because you’re worried about feeding your family and staying in your home. While those are valid reasons to put off saving for the future, if you can find the extra money, each little bit of investing adds up.
Retirement Savings and Your Taxes
Investing in your 401k or traditional IRA throughout the year is not only beneficial to the amount of money you have to draw from during retirement, but it also gives you a tax break. Depending on your age, you can invest thousands of dollars for your retirement and receive a reduction on your tax bill each year.
So, if you’re looking for a way to reduce your taxes in 2021, it might be a good idea to invest in your retirement funds. That way, you benefit from the tax breaks, and you grow your savings at the same time. To determine the exact amount you can invest in getting the tax benefit, either consult the IRS directly or talk to a tax accountant.
Where to Find Money to Invest
This year brought plenty of challenges with it, including financial ones, and since the pandemic continues, you might still have problems making ends meet in your budget. So, how do you find money to invest in your retirement fund?
There are a couple of ways to find money in your budget so you can add to your retirement investments, and the concept is pretty simple but can be challenging to implement. You can either increase your income, decrease your expenses, or both. Start a side gig or ask for a raise from your employer to increase your income and lower your costs by eliminating what you can and reducing what you can’t.
Use the money you create by widening the gap between your income and expenses so that you can invest in your retirement before the tax due date of April 15, 2020.
One thing that might be eating your money and draining your budget is credit card debt. If you have multiple credit cards, it’s even worse because you’re making several minimum payments every single month. Eliminating that debt would be a huge relief on your budget and would give you extra money you could use for your future.
Sooner Partners can look at your eligible outstanding credit card debt and offer a debt consolidation loan that will take your balances and bundle them into a single loan. This will give you one minimum payment, a single interest rate, and a clear path to a debt-free life.
You can use the money you save by consolidating to invest in your retirement fund and grow your nest egg.
Doing What You Can
You might think that if you can’t dump thousands of dollars into a retirement fund, investing in your 401k or IRA isn’t worth your time. And this year’s struggles make it difficult to carve out even the smallest amounts for something that probably feels far into the future.
The truth is that every dollar you save for your retirement will likely multiply and help grow your bottom line. So, you don’t have to invest huge amounts of money to make a difference, but if you don’t save anything for your retirement, you’ll probably look back and wish that you had.