4 Problems You Could Face if You Don’t Save Enough for Retirement
It's recommended that everyone saves for retirement throughout their career. Find out how your retirement could be affected if you don't save enough.
If you were slacking on your retirement goals in 2021, now is your time to make up for it. You have until this year’s tax filing deadline (April 18 for most filers) to fund your 2021 Roth IRA (individual retirement account). This account is a great way to pay your tax bill upfront and enjoy tax freedom later. But don’t dive in too fast without reviewing the income requirements. There are penalties if you contribute more than the allowable limit.
Let’s review a quick game plan since there’s less than a month left to contribute to a 2021 Roth IRA.
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Start with a goal
Although the clock is ticking, you don’t want to move too fast without developing a Roth IRA action plan. Ask yourself these three questions:
How much am I eligible to contribute to a Roth IRA?
How much do I want to contribute to my 2021 Roth IRA?
How will 2021 contributions get me closer to my master plan?
Now, review the 2021 contribution limits so you can explore the possibilities. If you’re under 50, you can contribute up to $6,000 to a Roth IRA. If you were 50 or over in 2021, you can contribute up to $7,000.
Then, take a look at your finances. How much can you realistically contribute without putting yourself in a financial rut? You want to make sure you have your short-term goals squared away first. If you need to cut back on your favorite snacks or recurring subscriptions over the next month, it may be worth the sacrifice.
Put your contributions on autopilot
After you’ve committed to a contribution amount, now it’s time to get the ball rolling. You can set up automatic contributions from your checking account to your Roth IRA to make sure your money flows into the account before the deadline.
Since you have a short amount of time to fund the account, here’s how you can set up your contributions:
Contribute a lump-sum amount right now.
Set up recurring transfers of a set amount every week.
Consider allocating work bonuses to the account.
Let’s say you have a goal to contribute $3,000 to a 2021 Roth IRA. If you’ve met your emergency fund goals and have $1,500 to spare, you can deposit that money into your Roth IRA right now. Then, you can set up $500 deposits every week for the next three weeks. Right before the deadline, stash away any extra money or bonuses that come your way.
Create your money plan
It’s important to create a plan that makes sense for your financial situation. If you don’t have extra dollars sitting around, it’s time to get creative.
Ask yourself these questions:
Can I allocate money from a side gig to a Roth IRA?
Can I get paid for teaching what I know within the next seven days?
Can I land a freelance gig that will pay me before the Roth IRA deadline?
The gig economy has created a plethora of opportunities to make money on the go. If you’re willing to take on tasks for other people, like shopping, there are apps that can connect you with people who need your services.
Your 2021 Roth IRA dreams are closer than you think
Contributing to a 2021 Roth IRA can be a quick victory for you this year. All you have to do is create a strategic plan so you can sprint to the finish line. After you celebrate your victory, then it’s time to get started on 2022 Roth IRA contributions if you qualify.
If you’re not convinced that you should contribute to a 2021 Roth IRA, think about the possibilities of a million-dollar Roth IRA. Your 2021 contributions can make a big difference on the growth and performance of your portfolio over time. So if you’re ready, now is the time to focus so you can wrap up any outstanding goals you had in 2021 and get one step closer to living your best retired life.
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