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The financial decisions you make today can significantly affect your financial situation many years later. This is why it is important you start thinking about what you need to do now in order to ensure you have the quality of life you deserve during your retirement years. There are a variety of financial strategies that can be utilized in order to make sure you have enough capital to sustain you after you have stopped working to earn a living. Here are just a few you may want to consider. 

Save a set portion of your income 

One common strategy to prepare for retirement is to set aside a certain percentage of your income. Financial experts previously advised putting 10% of your income into savings. However, nowadays, personal finance experts suggest you put away 15% of your income. You may even want to consider more than 15% if you can afford to. 

Cut down on your biggest expenses 

Limiting how much you spend on your largest recurring expenses can help significantly in securing your financial situation for your retirement years. For example, you can minimize how much space you rent or buy for housing, which is one of the largest expenses for most American budgets. You can also opt to live in less expensive localities. 

Consider spending less on your transportation needs by choosing a smaller and less expensive vehicle. You can also opt for more fuel efficiency as well which can save you money on gas in the long run. 

Food is another major recurring expense you can work towards saving money on. This could mean eating out less or making sure you do not buy too much food that ends up spoiling. 

Your financial advisor can also provide you with additional ways to save money on these and various other major expenses. 

Retirement accounts 

Along with having a savings account you will also want to consider putting money into tax-advantaged retirement accounts. With an Individual Retirement Account (IRA) you will be able to invest your money in appreciating assets as well as obtain certain tax benefits, depending on what type of IRA you are utilizing. Traditional IRAs may allow you to deduct your contributions from your tax returns for that year, while Roth IRAs will allow you to avoid capital gains taxes when you finally withdraw your funds. 

Other types of retirement accounts may be offered by employers along with matching contributions. This means your employer will match a portion or even your entire contribution each time you put money into your employer-sponsored retirement account. 

The advantage of these types of retirement accounts is they may provide significantly higher returns than regular interest earned from savings accounts. However, you will be penalized if you withdraw funds prior to reaching retirement age. 

Comprehensive retirement planning 

These are just a few tactics you may want to take a look at when creating a retirement strategy. However, it is important you take a comprehensive view and customize your retirement planning to your specific situation and personal retirement goals. Not everybody has the same objectives and the same access to resources. 

Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. 

Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. 

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.