SPRINGFIELD, Mass. (WWLP) – Resolutions to lose weight and eat healthy are common in the new year, but what about financial resolutions?
According to the Tax Policy Center, households making $100,000 a year can expect to save $2,260 in taxes in 2018. If you invest that amount each year for five years and consider an average annual return of 10 percent, you can stash away more than $17,000 toward your retirement.
The holiday season is over but tax season has just begun and one of the ways that you can make sure you meet your financial resolutions for this year is by investing some of that extra money into your future.
“February 1st or roughly about that time people are going to find out how much of a reduction they will have in their paychecks from the tax cut. That is a perfect catalyst to take that money and add it to your 401K plan or add it to your ROTH or add it to some investment plan that you have to be resolute about. You can’t change it once you do it,” explained Mark Teed, the Senior Vice President of Raymond James & Associates.
Teed says you should be putting at least 10 percent of your take home pay into retirement accounts. Consider investing in a 401k up to your company’s match and put the rest in an IRA. Teed says investing in mutual funds might be better than individual stocks for the average investor.
“They really do need to put away early. I waited longer than I should have. But they really should plan early. Put something away every week, start investing and hope for the best,” said Rick Lajoie of Holyoke.
Teed says he’s predicting another good year for the stock market with roughly a 12 percent return on your money with technology, healthcare and industrials all looking strong.
Keep in mind the tax breaks you get now are set to expire after 2025.