Love Your Future: Retirement Planning Essentials

As winter lingers on, it’s easy to feel the seasonal blues – but February offers the perfect reminder to show some love to what matters most, including your financial future. Instead of letting the cold weather bring you down, consider using this time to nurture your financial wellness, especially your retirement savings. Below are a few ways you can strengthen your financial foundation for a secure, love-filled future.

Maximize Retirement Contributions:

One of the most effective ways to boost your retirement savings is by maximizing your contributions to tax-advantaged accounts. By doing so, you can take full advantage of the tax benefits these accounts provide, potentially increasing your retirement nest egg for the years to come.

For the year 2026 the contribution limits for retirement accounts have been set as follows:

• 401(k): Increased to $24,500 (with an additional $8,000 catch-up contribution if you’re 50 or older, and up to $11,250 catch-up for ages 60–63 under certain rules).
• Traditional and Roth IRAs: $7,500 (with an additional $1,100 catch-up if you’re 50 or older).
• Important note: If you’re age 50 or older and earned more than $150,000 in FICA wages from your employer in the prior year, any 401(k) catch-up contributions must be made as Roth (after-tax) contributions.

Contributing the maximum amount to these accounts allows you to build your retirement savings while reducing your taxable income for the year, helping you plan ahead for a secure future.

Structure Your Portfolio for Success:

When it comes to retirement accounts, two of the most popular options are the Traditional IRA and the Roth IRA. Both have distinct benefits depending on your financial situation and retirement goals.

Traditional IRA:

• Contributions are pre-tax, which means they lower your taxable income for the current year.
• The growth is tax-deferred, meaning you won’t pay taxes on it until you begin withdrawing funds in retirement.
• This account can be ideal for individuals who anticipate being in a lower tax bracket when they retire, allowing them to minimize their tax liability over time.
• Required Minimum Distributions (RMDs) apply once you reach age 73.

Roth Accounts (Roth IRA, Roth 401(k)):

• Contributions to a Roth account are made post-tax, meaning you pay taxes on the contributions upfront.
• Growth is tax-free, and withdrawals in retirement are also tax-free.
• Roth accounts are ideal for individuals who expect to be in a higher tax bracket during retirement, or for those who want to avoid RMDs.
• They also play a significant role in estate planning by offering tax-free inheritance opportunities to your beneficiaries.

If you currently have a Traditional IRA but anticipate higher taxes in the future, converting to a Roth IRA might be worth considering. Though you’ll need to pay taxes on the converted amount, all future withdrawals will be tax-free, which could benefit you in the long run.

Social Security Strategy:

As you focus on your retirement savings, don't overlook your Social Security strategy. The earlier you start planning how you will claim Social Security benefits, the better. While it’s tempting to claim benefits as early as possible, doing so could reduce your monthly payout. By strategically delaying your claim, you can maximize the amount you’ll receive later in life.

Supplemental Savings: Health Savings Account (HSA):

If you’re eligible for a Health Savings Account (HSA), this can be an excellent supplementary tool for your retirement planning. Contributions to an HSA are tax-deductible, and the account grows tax-free. Additionally, withdrawals for qualified medical expenses are tax-exempt.

After age 65, you can use your HSA for non-medical expenses without penalty. However, any non-medical withdrawals will be taxed as ordinary income. Despite this, an HSA can be a powerful way to supplement your retirement savings, particularly as healthcare costs rise.

As February reminds us to celebrate love in all its forms, don’t forget to show some care to your future self. By focusing on maximizing your retirement contributions, understanding the benefits of different account types, and planning for future health and Social Security needs, you can help ensure long-term security and confidence for the years ahead.

Contact an Oppenheimer Financial Professional here to learn more ways to save for your future.