Individual Retirement Planning

Your Quick Guide To Retirement Planning

There is a lot of confusion about retirement planning, because everyone has different advice for you. The truth is the retirement plan that’s right for you will not work for anyone else. Our financial advisors can help you with planning for retirement by aligning your financial situation with your goals and timelines. Planning for retirement is complex, which is why you want to work with experts.

Why Planning For Retirement Is Important

You’re responsible for your retirement. While you may qualify for Social Security benefits, that’s probably not enough income to fund your retirement. Most retirees living comfortably have multiple streams of income. These may include Social Security, 401(k) distributions, IRA withdrawals, and income from other savings and investment accounts.

It’s easy to postpone retirement planning when you’re young, but you don’t want to wait too long. With investments, time benefits you. The more time you have, the more your money will grow, thanks to compound interest. But even if you’re nearing retirement, it’s not too late to invest in your future.

Tax Benefits of Retirement Planning

It doesn’t have to be a huge financial burden to save for retirement. The IRS actually has rules in place that allow you to reduce your taxable income now by investing in a tax-deferred retirement account. This could be a 401(k) or 403(b) your employer offers, but it can also be an individual retirement account.

With tax-deferred retirement accounts, you can invest your money before taxes. This tax break makes it easier to save for retirement. The investments grow tax-deferred until you retire. Then you will pay income taxes on the distributions.

Traditional vs. Roth Retirement Plans

The biggest benefits of traditional retirement plans are immediate tax deductions for you. You can lower your taxable income by contributing to your financial future. A Roth retirement plan works differently. With a Roth account, you contribute money after taxes. The upside is that you can receive tax-free distributions from it during retirement.

There are some advantages to both accounts, and you may choose to invest in both types. Your current tax obligations may be high, and a tax-deferred retirement account can help. If you expect your future tax rates to be higher, a Roth IRA might be a better.

The Second Half of Retirement Planning

Don’t forget about the second half of your retirement. Investing for your future is the first half, but when you retire, you still need our financial advisors. Managing your retirement income distributions to provide a secure income while reducing your tax burden is just as complex as setting up your investment accounts. We want to make sure you don’t outlive your retirement or pay more in taxes than necessary.

FAQs About Retirement Planning

How Much Should I Contribute to My Retirement Account?

Most experts recommend investing 10 to 15% of your gross income in your retirement accounts. You may need to invest more if you’re starting late. We can help you determine which retirement accounts to focus on. Most of the time, if your employer is matching your contributions, it makes sense to start with the 401(k).

When Is It Too Late to Start with Retirement Planning?

While it might have been better to plan your retirement 20 years ago, it’s still better late than never. While you might not replicate the success of someone who started earlier, you can still take advantage of catch-up contributions the IRS offers. Our financial experts can steer you in the right direction and tell you exactly what to focus on to increase your retirement income in the future.

What Is the Best Retirement Plan?

Whichever retirement plan is available to you is the best retirement plan. There are many nuances to the different retirement plans, but getting started is the most important step. We can help you select the most appropriate plan for your situation and help select investments that will put you on track to a secure financial future.

Call Us to Create Your Retirement Plan

We want you to think about your retirement plan before it’s too late. Our financial advisors will analyze your financial situation and create a retirement plan that’s right for you. Call Meridian Investment Advisors today to schedule your appointment.