August Financial Calendar + Checklist

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Retirement may feel like a long way off, but it’s important to begin saving for retirement early. The average American predicts they’ll need $1.7 million in savings to live comfortably after leaving the work world. However, most Americans close to retirement have saved only 12% of what they need. In this month’s financial checklist, we’re looking at the necessary steps for saving for retirement.

 August Financial Checklist: Saving for Retirement

  • Determine how much you will need to live comfortably in retirement
  • Contribute to your 401(k)
  • Consider opening an IRA
  • Funnel more money into your retirement savings

  1. Determine how much you will need to live comfortably in retirement

To maximize your savings strategy, calculate how much you’ll need to live comfortably in your Golden Years. Here’s a rule of thumb from financial experts:

Retirement income  ≥ 80% of your final pre-retirement salary

Try Mint’s retirement calculator to determine how much you need to save to live your dream retirement. 

  1. Start saving today

The best advice for saving for retirement: start today. The more time your money has to grow, the more you’ll get from compounding returns.

Compounding returns = the increasing value of your money due to the interest earned on both principal and accumulated interest 

  1. Contribute to your 401k

Experts recommend contributing 10% to 15% of your income to your 401(k) each year. Aim to automate your contributions to invest consistently; essentially, you can set it and forget it. Does your employer offer contribution matching? Meet their match limit to take advantage of free money.

In 2020, the 401(k) contribution limits are as follows:

  • 50 and below: $19,500
  • 50 and above:  $26,000 + $6,500 catch-up contribution

  1. Consider an IRA

If you’ve maxed out your 401(k) contributions or don’t have one, you might consider opening an IRA. There are two main types of IRA, which include:

    • Traditional IRA:  Deduct contributions now and pay taxes on withdrawals later
    • Roth IRA: Pay taxes on contributions now and get tax-free withdrawals later

In 2020, the IRA contribution limits are as follows:

  • 50 and below: $6,000
  • 50 and above:  $7,000 + $1,000 catch-up contribution

  1. Find ways to funnel more money into your retirement savings

To build your savings, determine ways to funnel more money into your dedicated accounts. You might revise your current budget to dedicate more to savings, supplmenet your income with a side job, or pay down debt to avoid wasting money on interest.

Key Takeaways

Stay on track with our investment calendar and create an editable copy in three easy steps: 

  1. Open our Calendar Template in Google Sheets
  2. Select “File”, then “Make a Copy”
  3. Save in your own Google Drive to make edits

Give your finances an overhaul in 2020 with our monthly financial checklists. Check out our previous posts, and look forward to upcoming financial checklists in coming months. 

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