Ask Dana! Save More: A Financial Resolution on Autopilot

Ask Dana! Save More: A Financial Resolution on Autopilot

Hi Dana: One of my financial resolutions is to save more, especially for retirement. How do I know where to save?

A new year brings a sense of clarity and the fresh opportunity to take action and set better habits in motion. While many of our resolutions (think – diet or exercise) are sometimes difficult to stick to, a financial resolution like saving more can be set up for success quite easily. Saving more for retirement is a simple, yet powerful resolution for most of us because it can have a positive impact for many years of our lives. Depending on your employment status, there are a variety of ways for you to save.

The best part about this resolution? Options to save offer the best way to save in my opinion – the AUTOMATION of contributions. You can set it up once and you will be scheduled to contribute all year long.

If You Are Employed
If you have an Employer 401K, 403B, or other savings plan, make it a point to start contributing to your plan if you haven’t already, or simply increase your employee deferrals for 2021. The limit this year for regular 401k or 403b contributions is $19,500, and you can do an extra $6,500 if you are over age 50. Don’t forget to consider and choose whether Roth or Pre-Tax contributions or combination of both would be attractive for your overall tax strategy. Be sure to see if your employer offers a company match and try to take advantage of the full match.

If you are already maxing out your savings, ask if your plan offers other ways to save like after-tax contributions, deferred compensation plan, employee stock purchase programs, or other incentive plans.

If You Are Self-Employed
When you have your own business, options include IRAs, Simple IRAs, SEP IRAs, 401ks or Solo 401ks. The amount that you can contribute can range from $6000 for someone under 50 for an IRA or ROTH, to up to $58,000 which is the limit for SEP IRAs, 401ks or Solo 401Ks. If you would like to set up a plan to fund for 2021, there is still time to open and fund an IRA or SEP IRA, should those end up being right for your business.

You’ll need to assess your income level, type of business entity, number of employees (if any), desired contribution amount, and time of year in order to select which plan is best for you. A Financial Advisor or professional tax advisor can certainly assist you with this selection and can make the process easy.

If You Are Not Employed
There are many individuals who still would like to save for their retirement, but do not have earned income from traditional employment. If you are married, your spouse may have earned income and there could be options for you to contribute to an IRA. Ask your advisor or accountant about this possibility.

If you simply have income from other sources that you would like to earmark for retirement, you will have to check with an accountant to see if you would be eligible for any “retirement” accounts based on your income type. Even if traditional retirement account types are not available, there are still options for you to save in an automated fashion for a regular savings or investment account.

Remember, the BEST WAY TO SAVE is to set up a recurring contribution. A monthly basis is great but quarterly or annually works too. The key is to have it happen automatically. For long range goals like retirement, there are many kinds of investments that could be suitable depending on your risk appetite. If you aren’t sure what would be best for your retirement account, just ask! Seeking outside advice from professionals when you need it for tax, legal, or financial advice can make the overall process easier and less stressful for you.

Wishing you peace and universal support in the days ahead, one day at a time.


Dana R. Mascalo CFP®, RLP®, AAMS®, C(k)P® is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.

This material presented is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. TrinityPoint Wealth, nor its investment advisory representatives are permitted to provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice.