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5 Retirement Tips for 2020 -- and Beyond

With 2019 nearing its end, many of us are starting to focus on the new year -- namely, ways we can manage our money more responsibly during it. And if you've got retirement on the brain, you should know that the moves you make in the coming year could set the stage for financial security later in life. Here are a few tips that'll help you plan appropriately for retirement -- both in 2020 and in the years that follow.

1. Take advantage of catch-up contributions

If retirement is on your radar, it probably means that milestone isn't all that far away. If that's the case, and your savings aren't up to par, then it's time to get serious about boosting them. Generally speaking, it's a good idea to have about 10 times your ending salary socked away for your golden years. That means if you're in your late 50s or early 60s earning $100,000, and you're sitting on $250,000 in retirement savings, you're at risk of falling short if you want to leave the workforce within the next five years.

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The good news? Both IRAs and 401(k)s offer catch-up contributions to workers 50 and older. For the former, you get a $1,000 catch-up that brings your total annual contribution limit to $7,000. For the latter, you currently get a $6,000 catch-up that gives you the option to sock away $25,000 on an annual basis. Come 2020, however, that catch-up is increasing to $6,500, and since the regular 401(k) limit is rising as well, you'll get a chance to set aside $26,000 annually for your golden years.

2. Know how to invest your retirement savings

The closer you get to leaving the workforce, the less aggressive your retirement investments should be. The reason? If the market tanks heavily in the near future, you may not have time to recover from losses before you need to start taking withdrawals from your savings. Therefore, if the bulk of your IRA or 401(k) is in stocks, and you're within a few years of retirement, it could be time to shift some of those positions to bonds instead.

But don't dump your stocks entirely. Rather, figure out what percentage of your portfolio should consist of them. One rule of thumb is to subtract your age from 110 to get at that percentage. That means if you're 60, you should have 50% of your portfolio in stocks. That's not a perfect formula, though, and a lot will depend on factors like your tolerance for risk and additional income sources you might have in retirement.

3. Sock away funds for future healthcare costs

There's a good chance healthcare will be your greatest expense once you leave the workforce. That's because you'll be on the hook for Medicare premiums and deductibles, and you'll also need to grapple with the coverage gaps many seniors face. That's why it's wise to set aside funds specifically for healthcare purposes, and to this end, a health savings account, or HSA, is a good bet.

If you're currently enrolled in a high-deductible health insurance plan -- which, effective in 2020, means an individual deductible of $1,400 or a family deductible of $2,800 -- you can contribute money to an HSA to cover both near-term and future medical expenses. Any funds you don't withdraw immediately can be invested for added growth and carried all the way into retirement, and both contributions and withdrawals from an HSA are tax-free.

Beginning in 2020, you can save up to $3,550 a year in your HSA if you're contributing as an individual, or up to $7,100 on behalf of a family. And if you're 55 or older, you get a $1,000 catch-up on top of the limit that applies to you.

4. Boost your Social Security benefits

Though you shouldn't plan to live on Social Security alone in retirement, those benefits could serve as a sizable income stream for you. Boosting them, therefore, is something it pays to do. The more you earn during your career, the higher your benefits stand to be, since they're calculated based on lifetime earnings, so don't grow complacent at work just because your career is winding down. Instead, fight for raises, go after promotions, and continuously research salary data for your industry to make sure your income is reasonable given your job title and experience.

Another good way to boost your Social Security benefits? Check your annual earnings statements for errors. If you spot a mistake and get it corrected, your benefits could rise as a result.

5. Start thinking about what you want to do with your time in retirement

Many seniors retire only to wind up bored and miserable. Even if you're not leaving the workforce just yet, think about the ways you want to spend your days once your career comes to a close, and determine whether you have enough savings to support those goals. Traveling extensively, for example, may be a good way to spend your golden years, but if you don't have enough money in your IRA or 401(k) to repeatedly globe-trot, it could pay to postpone retirement a few more years and boost your savings. Or, you could decide to reset your expectations. Both are reasonable solutions, but they're ones you'll want to work out before your retirement officially kicks off.

The better a job you do planning for retirement, the happier you're likely to be during it. Follow these tips, and with any luck, you'll wind up in a great position to enjoy your golden years to the fullest.

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