Maybe you already contribute to your employer’s 401(k) plan. If you’re ready to ramp up your retirement savings, however, you may also want to consider an individual retirement account, also known as an IRA. You can contribute as much as $5,500 in 2017 to either a traditional IRA or a Roth IRA. That limit increases to $6,500 if you’re age 50 or older.1
For many, though, the choice between a traditional IRA and a Roth isn’t an easy one. They both offer their own unique benefits. Which one is right for you? There’s no universal answer to that question. Your IRA choice should be based on your unique goals, needs and concerns.
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Planning on an early retirement? With consistent saving and disciplined spending, you can make it happen. Even if you don’t think you will retire early, you still may want to plan for it. Health issues and disability force workers into early retirement every year. A contingency plan can help you navigate a challenging situation.
Regardless of whether your early retirement is planned, leaving the working world at a young age can present a number of challenges. You have to fund a longer retirement, which could stretch your savings. You may have to wait years before you can file for Social Security and Medicare, which would force you to come up with creative alternatives. Consistent, stable income is at the heart of any financially sound retirement. In many ways, your financial health in retirement depends on your ability to generate income that exceeds your expenses. Your income will likely come from a variety of sources, including Social Security, savings and investments, and possibly even a company pension.
There could be times, though, when those income sources don’t cover all your expenses. You could face unexpected emergency costs, or volatile market swings could limit your income. In those times, you may find it helpful to utilize supplemental income, preferably in a tax-efficient manner. If you’re like many workers, much of your retirement savings may exist inside your company’s 401(k) plan. The 401(k) is one of the most commonly used retirement savings vehicles because it offers tax-deferred growth and, possibly, matching employer contributions. Those two elements can be a powerful combination for retirement asset accumulation.
When you leave your employer, whether it’s because of a job change or retirement, you may face a decision about what to do with your 401(k) balance. Conventional wisdom is that it’s usually wise to roll your balance into an IRA. When you do a rollover, you avoid taxes and penalties, and you may gain access to a wider menu of investment options. For many workers, age 65 is an important milestone. For years it has generally been acknowledged as traditional retirement age. It’s the age at which you may become eligible for Medicare, Social Security and even corporate pensions.
However, many workers now say they plan to wait past age 65 to retire. In fact, according to a recent study from CareerBuilder, 30 percent of workers age 60 and older say they won’t retire before age 70. An additional 20 percent plan to never retire. That means half of all workers over age 59 say they will work at least another 10 years.1 Are you considering using an annuity to provide income during your retirement? That could be a wise decision, depending on your needs and objectives. Annuities can be a helpful tool to create predictable, reliable income that lasts through your retirement years.
You can generate income from annuities via one of two different methods: annuitization or withdrawals. With annuitization, you contribute a lump sum into the annuity policy. The insurance company then converts that lump sum into a lifetime guaranteed stream of income based on your age and other factors. You lose access to the lump sum, but you receive a stream of income that’s guaranteed for life. |