Between unexpected expenses like home repairs or car trouble and milestone expenses like college tuition or retirement, it can be difficult to know if you are using the best savings strategies. When it comes to saving wisely, a lot can be said for employing methods that help you retain more of your money and allocate it in tax-smart ways.
To help you save more wisely this year, consider trying one of the following strategies:
- Contribute the maximum to your workplace savings plan.
Consider gradually increasing your annual contributions, and therefore those of your employer, to your 401(k), 403(b), or governmental 457(b) plan until you reach the maximum annual amount.
- Open a health savings account.
A health savings account (HSA) can be a tax-efficient way to pay for medical expenses now and when you retire. Your elected contributions are made pre-tax, and many employers will offer a regular contribution to allow you to build your savings year after year.
- Pay down high-interest debt.
When managing multiple debts, try using extra savings to first pay down the one with the highest interest rate while continuing to make the minimum payments on your other debts. Once the debt is paid, focus on the one with the second-highest interest rate, and so on.
- Contribute to an IRA.
Whether a traditional IRA (earnings grow tax-deferred, but income taxes are charged on withdrawals) or a Roth IRA (earnings grow tax-free and qualified withdrawals can be taken tax free), opening one of these accounts can be a tax-smart way to save for retirement.
- Open a 529 college savings account for a loved one.
If helping a child, grandchild, or other loved one pay for college, a tax-advantaged 529 savings account may be the best option.
Call our office at 814-536-1040 to schedule an appointment to discuss these and other saving strategies to ensure you’re on the best path for you and your family!