By: Faizan Haq, Editor-in-Chief & Publisher, Your Bliss Magazine & CEO, Manage Your Business, LLC

Contributing to retirement accounts secures your financial future. It is a great tax saving strategy for the year 2023, and you still have time. The deadline to contribute to your retirement accounts is April 15th, 2024. If you haven't done that already, please consult with a professional to help you make it happen. Here is the summary of the benefits and strategies in regard to maximizing your contributions.

1. Reducing Taxable Income:

One of the basic advantages of contributing to a retirement account is that it lowers your taxable income for that year. Your contributing amount to a 401k or individual (IRA) is deducted from your taxable income, hence lowering your taxable income. Overtime, the reduction can result in substantial tax savings, particularly, if you are maximizing your allowable contributions to RAs.

2. Employer’s Contributions:

Make your employer pay for retirement. Many employers have benefits that include matching contributions for their employees’ retirement accounts. By not initiating your own retirement contribution, you’re leaving your money with the employer. Over a period of time, it may add up to tens of thousands of dollars.

3. Catch-up Contributions:

If you are 50 or older, you can add an additional amount to your RAs. It is called catch-up contributions. These contributions have higher limits. They are specifically designed to help older individuals put away more savings for their retirement.

4. Growth without Taxes:

One of the greatest benefits of RAs is the tax deferred growth. All the earnings that accumulate in RA accounts are tax free until you make a withdrawal while in retirement. Consult with a seasoned investment consultant to strategically allocate your RA funds. Plan to enjoy your retirement in abundance.

5. Long-term and short-term financial security:

As you maximize your retirement contributions, you’re certainly setting yourself up for long-term financial security. A short-term financial security benefit is that you can borrow from your own RAs. This way your RA becomes your bank and any interest you pay adds to your own retirement account. There are certain limits and rules that apply and you must consult with a professional to be able to take advantage of this benefit.

6. Financial Positioning:

RA accounts also make your net worth look good. When you are applying for home mortgages or business loans, your bottom line looks attractive to the banks. It also demonstrates that you are financially responsible and are planning for the long term.

It is important to take into consideration your own financial position, consult with a financial advisor, and your accountant to take full advantage of this benefit. It is clear that maximizing contributions to retirement accounts is a strategic move that provides long-term financial security, lowers your taxes, and financially positions you well.