7 steps to savvy financial planning

March 16, 2023

Whether you want to exercise more, learn a new hobby, or set financial goals, being practical and consistent are two essential keys to success. Retirement is a long-term goal that almost everyone has. Reaching that goal, however, takes many years of consistency and dedication.

To that end, we’ve assembled a list of seven savvy retirement-saving moves that stand the test of time. They’re the best course of action for building a roadmap to a comfortable retirement. Read on for more information on how to meet your retirement goals.

Step 1: Establish an emergency fund

It’s important to be prepared both mentally and financially for life’s rainy-day events that come up — oftentimes unexpectedly. The typical recommendation is to have between 3-6 months’ salary saved. This number can fluctuate based on your marital status, phase of life, and personal preference.

Step 2: Meet your employer’s 401(k) match

Who doesn’t like free money? Many companies offer a match on 401(k) contributions. For example, a company may offer to match 50% of the first 6% of your paycheck you defer (tax-free, of course) to your 401(k). If you’re not deferring that 6%, you’re missing out on money that your company has earmarked for this purpose — and over the years, missing out on that match could mean tens or hundreds of thousands of dollars you’re opting out of receiving.

Your traditional 401(k) account will grow tax-deferred, and your Roth 401(k) account will grow tax-free. There are benefits to both traditional and Roth accounts depending on your age, tax bracket, and future earning potential.

Step 3: Make the most of your HSA

An HSA, or health savings account, is a tax-advantaged savings account funded with pretax dollars that are designated for use on healthcare expenses. (You can take a deeper dive on HSAs here.) Perhaps the biggest benefit of an HSA is the triple tax advantages it offers: 1) contributions are pretax and reduce your taxable income; 2) your HSA funds grow tax-free; and 3) when used to pay for eligible medical expenses, HSA withdrawals are tax-free.

HSA contribution amounts are capped each year by the IRS; you can always find the latest contribution limits in a handy table toward the bottom of our HSA page

If affordable, it’s a good idea to consider maximizing your HSA contributions to get the full advantage of these triple tax benefits. Plus, when a person reaches retirement age at 65, those HSA funds can then be used to pay for general living expenses — housing, food, or travel, for example — and will be taxed like any normal distribution from a retirement account. Unlike a 401(k) or an individual retirement account (IRA), HSA contributions made via payroll deduction aren’t subject to FICA (Social Security and Medicare) taxes, and a person is not required to take minimum distributions at any age.

Step 4: Establish a short-term savings account

The purpose of a short-term savings account is to plan for expenses you know will occur in the not-so-distant future. These expenses could include a vacation, new vehicle purchase, down payment for a home, or home improvement project. Having sufficient funds to cover all or a portion of these planned expenses will ensure you maintain a manageable amount of debt.

Step 5: Max out your 401(k) plan

Once you are in a financial position to contribute more money to your retirement, allocating more money to either your traditional or Roth 401(k) is a low-cost way to increase your retirement savings. Most 401(k)s have quality, low-cost mutual funds for you to choose from with diverse asset allocations and portfolio compositions.

Each year, the annual contribution limit to an employer-sponsored retirement increases a little bit. To see how much you’re qualified to contribute to your plan this year, check out our handy guide to retirement plan contributions here

Step 6: Invest in an individual retirement account (IRA)

Like 401(k)s, IRA limits are updated each year, and we have tables for quickly computing your limit. Keep in mind that both traditional and Roth IRA contributions have tax benefits and income limitations, so be sure to speak with your accountant or tax advisor to ensure you’re in the most tax-efficient investment account.

Step 7: Invest in a taxable account

One of the benefits of investing in a taxable account is flexibility. Due to the taxable nature of the account, there are no investment restrictions, contribution limits, or required distributions. Taxable accounts are good options for those who prefer to actively — or passively — manage their investment accounts.

There are plenty of resources and answers to questions you may have about saving for retirement, investments, or personal finance. Take time to think about where you want to be financially in the short and long term and get educated on the different ways to get there. As always, feel free to check in with us here at UBT's Union Investment Management Group (UIMG) — we’re always happy to help.

We hope you found some of our tips helpful! This article is part of the Financial Planning, part of UBT's Five Principles of Financial Wellness Series. 


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  • Managing Your Money
  • Financial Planning

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