Whether you are just starting out at your first job or have been with the same company for a number of years, retirement planning is an important and necessary factor in solidifying your future. At Magellan Financial, we believe it is pertinent to think of your future at any life stage and offer recommendations for your retirement planning:
Start With Your Goals
When first creating a retirement plan it is important to have goals that surround your plan. While you may have lofty goals, such as to save $1 million dollars for when you retire, it is in your best interest to focus on what you want to do in life before deciding on how much you will need. Once you know what you want to work towards, you should focus on how much you will need to save, where to invest it, how you will track your progress, and how to continually monitor your plan so you can make any necessary adjustments.
What To Do
Once you’ve set your goals, and have a solid foundation, you will then need to choose where you want your money to go. There are 2 broad categories that most retirement plans/accounts fall into. Those that are through an employer and those that are “other” would be through your own personal accounts. If you choose to set up a retirement plan through your company or choose to have an individual account you should preferably have your money in tax-favored retirement accounts like 401k’s, IRAs and ROTH IRAs. According to taxpolicycenter.org, traditional IRAs and 401(k)s allow taxpayers to deduct the value of contributions, up to a limit, from taxable income, but tax the value of the distributions made during retirement. Contributions to Roth IRAs and Roth 401(k)s generate no immediate tax deductions but allow distributions to be received tax-free after the worker has reached retirement age.
What Will You Save?
With your accounts all setup and knowing where your money will be going it’s time to look at how you will be investing. If you are accustom to making and spending a certain amount of money while working, you will want to think about how much is going into your retirement account, so if you do become accustomed to a certain amount you will want to make sure you retirement account can keep up with it. So the more you place into your account and if you begin to save at an earlier age, it will help you to lead the life you want to and have come accustomed to after you retire.
Save A Certain Percentage
If you do have a certain amount you want to save when you retire or know how much you can live on when you retire that is great but unfortunately, problems can arise and throw a wrench in your plans. If you save at least 10% of your income for retirement you may be in a comfortable position to live your life in a way in which you would want and also be prepared if a situation arises.
At Magellan Financial, we have the tools to help you make retirement planning any easy process by understanding your financial situation. To schedule an initial consultation or learn more about how Magellan Financial can help you plan successfully, please call us at 610-437-5650 or email us at .
Traditional IRA and 401k distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59 ½ or meet other requirements. All distributions may be subject to a 10% Federal tax penalty if distributions are taken prior to age 59½.