If it is a couple decades before you will retire, this is the best time to start planning for your retirement. Even individuals that have procrastinated on creating a retirement fund can still find ways to build their retirement up very quickly. When you strive to do this properly, you will look for innovative and safe strategies to use. One of the best techniques is to grow your retirement completely tax free, a strategy that is applicable for many people. Here are 6 tax free ways to grow your retirement fast that you may not have thought of before.
The most common way that people can save for their retirement is to set up a Roth IRA. This is a retirement account that will help you save money in tax-deferred dollars, up to a certain amount every year. There is a maximum contribution into this account that you can make. At the time of this writing, it is $5500. You can also contribute up to $1000 more if you are trying to catch up on previous contributions that you have not made. Although you do have to pay taxes on this money once it is withdrawn, you are building your retirement on a tax-free principal amount. This will allow you to build your retirement very rapidly, with as much money as legally possible.
Start A 401(k) Plan
This strategy is one that people often take advantage of when they work for businesses that offer them. You can put tax-deferred dollars into these accounts, similar to IRAs, but there are some drawbacks to this particular type of investment. You have no control over where your money is going to be invested which can be troublesome. Although this money will be in a mutual fund, what you cannot control are the stocks that the mutual fund is investing in. There are also higher fees that you will have to pay in comparison to Individual Retirement Accounts. However, if you can have both a 401(k) plan and an IRA, you will be saving money at an astounding rate.
Start A Health Savings Account
This is another type of account that you can start for your retirement that is not technically a retirement account at all. As with the others, your money will begin to earn interest on tax-free dollars, and they are used to help you pay for medical expenses.
Start A Roth 401(k)
Similar to a Roth IRA, these are perfect for people that are earning more than $137,000 every year. If you are married, you can also qualify for this type of 401(k) if you make more than $203,000 a year. The reason that this type of investment is also beneficial is that there is no limit to how much you can contribute.
Start As Early As Possible
This is simply a common sense suggestion that has massive implications in regard to the total amount of your investments. If you are a millennial, you need to start saving right away. If you do, you will end up with a massive retirement. If you are able to do a Roth IRA, Roth 401(k) plan, and standard Individual Retirement Accounts and 401(k)s, you will literally have the ability to save unlimited income. Although some of them do have maximum contribution limits, two of the others do not.
Add Additional Sources Of Revenue
One final strategy that you can use is to find a way to generate a secondary source of income. If you are married, both of you might want to consider starting a separate business. This money can represent a massive contribution to your retirement plans. This works perfectly when you are setting up at least one retirement account that has no ceiling on the total amount that you can contribute.
By using these simple suggestions on planning for your retirement, you will be able to save a large amount of money by the time you retire. By creating these 401(k) and IRA plans, plus adding additional sources of revenue, the sky is literally the limit. However, you need to start as early as possible if you hope to have the retirement that you have envisioned having once you get to that point in your life. Regardless of when you begin, you now have the means by which to start building your retirement funding using these tax-free strategies.