Halloween is almost here and the spooky ritual has us thinking about tricks more so than treats.
Today at 6:45 a.m., local financial professional Jeff Bangerter from Bangerter Financial Services will join FOX40 to share tips on how to trick ourselves into saving for the future.
Jeff’s tips aren’t the usual money-saving tips like cutting cable or taking a bag lunch to work:
TRICK #1: PAY YOURSELF FIRST
The trick is to automatically save money in some way, for example a 401(k), savings account at the bank or even a Roth IRA.
Research shows many of us do not understand how important it is to save for our short-term and long-term financial goals.
In fact, a recent survey shows more than half of Americans have less than $1,000 in their savings account, and 39% have no savings at all.
The benefits of paying yourself first are huge. You’re going to be ready for an emergency or reach your financial goals sooner, like buying a home.
TRICK #2: TAKE THE 401(k) MATCH
This might be a no-brainer, but the biggest trick with a 401(k) is making sure you get the company match.
Ultimately, Jeff recommends saving 10-15% of your salary in your 401(k).
The trick is to set up automatic increases to your savings either annually or with each raise. That’s a good opportunity to increase your savings rate before you get used to having the extra money in each paycheck.
TRICK #3: DELAY SOCIAL SECURITY
Waiting to claim Social Security is one of the best things you can do to boost your income in retirement.
Taking benefits before full retirement age results in a permanent reduction of as much as 25% of your benefit. And there's a big bonus for delaying your claim beyond your full retirement age -- your benefit will grow by as much as 8% a year from your full retirement age up until age 70.
There are a few instances where you might not want to delay your benefits. Jeff recommends you work with a financial professional to help you make the best decision.
TRICK #4: CHECK YOUR FILING STATUS
There are a couple of tax tricks to consider that could help you put more money in each paycheck.
A lot of people are withholding too much and getting a big refund each year. But that’s your money the government is holding interest free year-round.
If you withhold too little, you’ll owe at tax time.
Ideally, you want to have just enough withheld so that the amount will come as close as possible to your actual tax liability for the year.
For single parents - meaning you’re not married, your child or children live with you for more than 6 months out of the year and you contribute more than 50% of the income, you can file as “head of household” giving you a lower tax rate and higher standard deduction.
If your spouse died this year, you can still file married, benefiting from a better tax rate and larger standard deduction.
If you care for an elderly parent, you might be able to claim your parents as a dependent.
There is a link on my website, bangerterfinancial.com, to find out your filing status and answers to other tax law questions.
TRICK #5: CONVERT TO A ROTH
Thanks to the Tax Cut and Jobs Act of 2017, you may be in the lowest tax bracket you will be in for a long time!
Take advantage by considering converting some of your money from a Traditional IRA into a Roth IRA.
By converting your money to a Roth IRA, you will pay taxes on it now, and you will be able to withdraw it tax-free in retirement.