Have you used an IRA to accumulate assets for retirement? The IRA is one of the most popular retirement savings vehicles. There are a few different IRA variations, but the Roth has become increasingly popular in recent years. Roth IRA balances grew 51 percent from 2010 to 2013, while traditional IRA balances grew 28 percent over that same period. In 2013 more than $6 billion was contributed to Roth accounts, while only $4.61 billion was contributed to traditional IRAs.1
One reason for the Roth’s popularity is its unique tax treatment. You make after-tax contributions to a Roth. However, your funds grow tax-deferred inside the Roth, and your withdrawals are tax-free as long as you wait until age 59½. That means you can use a Roth to create a tax-free income stream in retirement. Fortunately, even if you’ve used a traditional IRA to accumulate assets, you can use a strategy known as a Roth conversion and still take advantage of the Roth’s unique tax structure. This strategy isn’t right for everyone, but it can be effective in the right situation. A financial professional can help you determine whether it’s right for you.
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Filing early provides you with an immediate source of guaranteed income. Delaying Social Security increases the benefit you’ll ultimately receive down the road. So when is the right time to file? The truth is, there’s no one right answer to that question because it depends on your individual circumstances.
Whatever you ultimately choose, it’s important to consider your options carefully. It may be one of the most important decisions you make affecting your retirement. Once you decide to file, you can’t change your mind. Below are a few things you may want to take into account as you prepare to make this major decision. Struggling to save for your child’s education? You’re not alone. A recent study from from Fidelity, 70 percent of parents want to fully pay for their child’s tuition and education costs. However, the same study found that the average parents are on track to cover only 29 percent of the costs by the child’s freshman year.1
College is a difficult financial goal for many families. Unfortunately, it’s only getting more difficult. A recent study found that the average tuition for a private, nonprofit college rose 129 percent from 1988 to 2018. Tuition for public college rose 213 percent over the same period.2 You can use a wide range of accounts and tools to save for college. You may find it difficult to know which is right for you. Below are three common savings tools. Each offers its own benefits and considerations. Your financial professional can help you choose the strategy that’s right for you. Are you a millennial with nothing saved for retirement? You’re not alone. According to a new report from the National Institute on Retirement Security, two-thirds of people between the ages of 21 and 32 have nothing saved for retirement.1
Of course, you may not think that retirement should be a big priority for you right now. After all, if you’re in your 20s, you may have more than 40 years left until you retire. You also may be dealing with more pressing financial issues, such as student loan payments or credit card debt. While it may seem like retirement is too far out on the horizon to worry about today, now may be the right time for you to start saving for your retirement. Below are three reasons why it pays to start your savings plan in your 20s. A financial professional can help you develop and implement a savings plan. To live your dream retirement, you’ll need to have a strong financial foundation as you enter retirement. That’s why you may want to create a list of financial goals to achieve before you stop working. Your list of financial goals should align with your unique needs and goals. However, some items are nearly universal for a comfortable and financially stable retirement. Three such items are listed below. If you’re preparing for retirement, you may want to develop a plan to hit these milestones.
Are you self-employed? If so, you may be living your dream. You set your schedule, run your business the way you like and answer to yourself. You may even get to earn income doing what you love. While self-employment can be challenging, it can also be greatly fulfilling.
Self-employment can present unique challenges, however, especially when it comes to retirement planning. While traditional employees can participate in their employer’s 401(k) plan or pension, self-employed individuals have to do it on their own. That can be a significant burden. Since you work for yourself, you may believe that you can delay retirement as long as possible. However, that assumption may be incorrect. There’s always the risk that you could be forced into retirement at some point because of illness or injury. Or you may simply decide you want to pursue other activities. Should that time arrive, you’ll be far more prepared if you have a plan in place. According to a recent poll from Nationwide, 60 percent of small-business owners don’t have a succession plan in place. Among those without a plan, nearly half believe such a plan isn’t necessary.1
Are you among those without a plan? If so, you could be creating significant liability for yourself, your business, your employees and your family. A business succession plan helps you make a smooth transition to the next owner without disrupting business operations. A succession plan also protects your interests. It helps you get fair value for your business and even retain some form of control or income. You can use your plan to identify the right successor and to make sure the next owner doesn’t deviate too far from your long-term vision. Unfortunately, without a plan in place, you may be forced to sell your business to the best available buyer. That could mean accepting less than fair value or selling to someone who has plans for the business that don’t align with your interests. You probably know a will is the most fundamental part of any estate plan, but did you know a will doesn’t have to be the only component of your plan? A will can achieve many things, including the distribution of your assets to the appropriate heirs. However, a will can’t do everything, and there may be some goals best accomplished through a range of other documents known as will substitutes.
Simply put, a will substitute is a document or tool that acts in place of a will in the estate-distribution process. A will substitute may apply to your entire estate or to specific assets. Some will substitutes are strictly estate-planning tools, while others are financial tools that can also be used for other purposes. Do you need a will substitute as part of your estate plan? It depends on your needs and goals. However, if you want to pass assets on to your heirs quickly and at minimum expense, there’s a possibility a will substitute could be right for you. Do you have a retirement strategy? For many people, retirement planning consists of contributing to their 401(k) plan or IRA every year. When you’re young and have many years until retirement, your strategy should focus on savings and asset accumulation.
As you get closer to retirement, however, you may want to think about more than just the dollars and cents of retirement. It’s important to save assets, but it’s also important to consider how those assets will be used when you leave the working world. That means planning your lifestyle and your activities during retirement. Below are four questions you may want to ask yourself as you develop your retirement strategy. These questions can help you think beyond the financial aspect of retirement and focus on lifestyle, relationships and even your health. That could inform your decision-making as you approach retirement. You’ve likely been paying into the Medicare system your entire career. If you’re approaching retirement, you’ll soon enjoy the benefits that come from all those payments. Generally, Medicare is available starting at your 65th birthday, although some forms of coverage may be started later.
Medicare was originally implemented to cover hospitalizations. However, other forms of protection have been added over time. Today, Medicare offers a robust menu of options and choices, each of which covers different services and comes with varying premiums, deductibles and copays. Many new retirees are overwhelmed by Medicare options. However, it’s important to review your choices and analyze your needs. By choosing the right protection package, you can minimize the impact health care has on your retirement assets. |
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