Page 50 - AAA Magazine – AAA Ohio Auto Club – September 2019

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Once you know these numbers, compare your proportion of savings to spending. If you aren’t saving 10 percent or more of your income, consider taking a more in-depth look at your finances to shift more dollars to savings.
Evaluate Whether Your Savings Are On Track
There is no one-size-fits-all solution for determining how much money any individual needs to live comfortably in retirement because differences in lifestyle, health considerations, life expectancy and other variables all play a role.
Still, “rules of thumb” can help you gauge how well you are tracking with your savings. A simple savings guideline from Fidelity recommends that you accumulate savings of 1x your salary by age 30,
3X by age 40, 6X by age 50, 8X by age 60 and 10X by age 67.
If you suspect your savings may be falling short,
it’s time to analyze your situation further to see where you truly stand and make adjustments to help you reach your goals.
Maximize a Roth IRA Now, Avoid Taxes Later
Tax-deferred accounts such as 401(k) plans and traditional IRAs are essential components of any retirement savings plan. Because they are tax-deferred, retirees need to plan for the fact that withdrawals
from these plans will be subject to taxes.
A Roth IRA can be an excellent addition to a retirement savings portfolio because it is not a
tax-deferred investment. Roth contributions are made with after-tax income, therefore withdrawals of contributions are not taxed. Earnings made by the investments contained in the Roth are also not
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