3 Win-Win Money Deals for You and 'Future You'

Saving for retirement is like time travel for your personal finances. When you save and invest money, you are sending money to your future self. And whenever you rack up credit card debt or take out a loan, you’re borrowing money from your future self. One of the biggest challenges of spending, saving, and investing is: Are “present-day you” and “future you” both going to be happy with the deal?

If you borrow too much money from your future self, you might force “future you” to work harder to earn extra money to pay off those debts. In the worst-case scenario, “future you” might never be able to retire.

But the opposite problem can also happen. If you save and invest every last dollar, if you don’t spend some money to have fun and make memories along the way, you might end up with plenty of money, but not enough time, health, or energy left to enjoy it.

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Let’s look at a few money moves that can be win-win deals for you today and you in the future.

1. Put money in a 401(k) or other workplace retirement account

One of the first things you should do in 2024, if you haven’t already, is make sure you’re contributing money to your 401(k) or other retirement plan at work. If you get an employer match, try to put in at least as much money as it takes to get that full matching amount. (For example, many companies might offer to match 50% of the first 5% of your salary. So if you put 5% of your salary, you’ll get an extra 2.5% of salary as employer matching contributions.)

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Why this is a good deal for you in 2024: Putting money into a 401(k) or other pre-tax retirement plan at work will reduce your taxable income. This can help you get a break at tax time. For example, if you’re single with an income of $60,000, that means you’re in the 22% tax bracket for 2024. So if you put 5% of your 2024 salary into a 401(k), this reduces your taxable income by $3,000, which saves you $660 on taxes.

Why this is a good deal for “future you”: Saving money for retirement can help your future self have extra income in retirement, instead of having to rely entirely on Social Security.

2. Put money into a traditional IRA

If you don’t have a 401(k) plan at work, or even if you do, you can put extra cash for retirement into a traditional IRA account. This is another pre-tax account that lets you reduce your taxable income. For 2024, you can put up to $7,000 into a traditional IRA (with an extra $1,000 “catch-up contribution” if you’re age 50 or older).

If you or your spouse are eligible for a 401(k) or other retirement plan at work, you might not be able to deduct all the money you put into a traditional IRA. There are limits based on income and tax filing status. But depending on your income, if you have extra cash, you can put the maximum amount into your 401(k) and still put up to $7,000 into a traditional IRA.

Why this is a good deal for you in 2024: Traditional IRA contributions — if your income is low enough to qualify — are great tax deductions, because they’re “above the line” deductions that reduce your adjusted gross income. For example, if you and your spouse (married filing jointly) have a combined income of $120,000 and you both have retirement plans at work, you can each put $7,000 into a traditional IRA for 2024. This would reduce your taxable income by $14,000. Since you’re in the 22% tax bracket, reducing your taxable income by $14,000 equals a tax savings of $3,080.

Why this is a good deal for “future you”: It’s always a good idea to save more money for retirement, especially if you can get a tax break. If you don’t like the investment options in your 401(k), or if you’re already maxing out your 401(k), putting more retirement savings into a traditional IRA can give your future self another source of retirement money.

3. Put money into a health savings account

One of the biggest expenses for retirees is out-of-pocket healthcare costs. Not everyone gets to use a health savings account (HSA), but if you qualify, this can be a great way to pay for healthcare for “future you.” If you have an HSA-eligible high-deductible health plan (HDHP), here’s how much you can put into an HSA for 2024:

  • Single coverage: $4,150
  • Family coverage: $8,300

Why this is a good deal for you in 2024: There are no income limits on HSA contributions. So if you’re a high earner whose income is in the “phase-out range” for deducting traditional IRA contributions, an HSA can give you an extra few thousand dollars of tax deductions. And like a traditional IRA, the HSA is a coveted “above the line” deduction.

Why this is a good deal for “future you”: The average retiree can expect to spend $157,500 on healthcare, even with Medicare. Your future self is going to need all the help they can get. Maybe they should get a side hustle.

Bottom line: All of these money moves are win-win deals for you and your future self. Investing more money in tax-deductible retirement accounts or a health savings account can help reduce your taxes today, and make life easier for “future you” in retirement.

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