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Retirement NewsHow to Boost Your Retirement When Social Security Only Covers 40% | Smart Change: Personal Finance | #retirement | #elderly | #seniors

How to Boost Your Retirement When Social Security Only Covers 40% | Smart Change: Personal Finance | #retirement | #elderly | #seniors

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Many 401(k)s additionally have employer matching contributions. These are deposits your employer makes to your retirement account based on how much you contribute. They’re essentially free money.

If you or your spouse have access to a 401(k) at work, use it. Aim to save 10% to 15% of your income, or more if retirement is within 10 years. The IRS allows you to contribute up to $19,500 to a 401(k) in 2021, or up to $26,000 if you are 50 or older. Note that those caps apply only to your own contributions and not your employer match.

If you have no 401(k), max out your IRA contributions. In 2021, you can deposit up to $6,000 in your IRA, or up to $7,000 if you are 50 or older.

Since the IRA contribution limit is fairly low, you’ll want to supplement your IRA deposits with savings to another account. A taxable brokerage account can do the job. Just keep your annual tax burden low by staying away from income-producing securities in this account. You can also minimize capital gains by buying stocks instead of funds, and then holding them for the long term.

3. Invest in dividend payers

High-quality dividend-paying stocks are a good fit for retirement portfolios for a couple of reasons. The first is obvious: Dividend-payers produce cash. The more cash your portfolio produces, the less reliant you are on selling stocks to fund your retirement distributions. Selling stocks at the wrong time can lead to realized losses. But even when the timing is good, selling stocks — and withdrawing the cash proceeds — does shrink your future earnings potential.

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