- Is it too late to begin planning for retirement?
- Where do I begin planning for retirement?
- What types of retirement planning options are available to me?
- Evaluate your retirement plan annually.
Is it too late to begin planning for retirement?
Whether you are 25, 35 or even 55, it is never too late to begin planning for your retirement. The age you decide to begin the retirement planning process, however, will determine the amount you will need to save to reach your retirement goals.
Where do I begin planning for retirement?
Begin by setting goals for your retirement. Depending on the goals you set for this time in your life, which could include travel or the pursuit of hobbies, you could need anywhere from 70-100% of your pre-retirement salary. You may decide to speak with a financial analyst to assist you in your retirement decision making.
What types of retirement planning options are available to me?
There are many different retirement planning options available. You only have to decide the one that will best fit for you. Here is a listing of popular retirement planning options:
- Traditional IRA’s – A traditional IRA, or Individual Retirement Account, is an individual plan that allows you to make yearly contributions. Your earnings will grow tax-deferred, but should you need to withdraw from your IRA, the amount will be taxed as ordinary income.
- Rollover IRA’s - A rollover IRA is a distribution of assets from another IRA or an employer- sponsored plan that has been rolled over into a traditional IRA. Theses are used to roll over assets to an account that offers tax advantages, flexibility for your investments and the option of converting to a Roth IRA.
- Roth IRA’s – A Roth IRA is an individual plan that permits nondeductible yearly contributions. Your earnings will grow tax-deferred, and qualified withdrawals from your plan are tax-free.
- Simplified Employee Pension (SEP) Programs – A Simplified Employee Pension Program is utilized by self-employed individuals and small business owners to attract and retain employees. It allows employees to accumulate tax-deferred retirement savings. Employers can then make contributions to the accounts and employees are responsible for the account’s maintenance.
- Keogh Plans – Keogh plans are tax-deferred retirement savings plans for self-employed individuals. A maximum of $30,000 per year can be contributed to the plan, and also deducted from taxable income.
- 401(k) Plans – 401(k) Plans are retirement savings plans that are funded by both employee and employer contributions. The employer will match a percentage of your contribution, which is taken from your pre-tax salary. The funds then grow tax-free until withdrawal.
- 403(b) Plans – 403(b) Plans are similar to 401(k) plans, but are reserved for employees of public education systems and certain other non-profit and charitable organizations.
- Reverse Mortgages – Reverse mortgages are utilized by homeowners who obtain cash advances from a mortgage lender. These advances are to be repaid upon the homeowner’s death or the sale of the property.
- Deferred Annuities – Deferred Annuities allow the accumulation of money for retirement on a tax-deferred basis. Money is invested and contributed over time, and the investment experiences both gains and losses. The payout of your investment earnings begin upon your retirement.
- Immediate Annuities – Immediate Annuities are purchased at the time you retire. A lump sum of money is invested and payout begin immediately. The payout schedule can continue for a certain number of years, or as long as you and your spouse live.
Evaluate your retirement plan annually.
Much like scheduling your annual physical exam, your plans for retirement should also be evaluated on an annual basis to ensure you are on the right path.
