Planning for Retirement: Tips to Help You Maximize Your Contributions from RBFCU Investments Group

People often wonder how late is too late to start saving for retirement? This question is difficult because the answer depends on your income and assets, your goals for retirement, and many other factors. Ideally, you should begin saving for retirement in your 20s. More time to save enhances your chances of having the kind of retirement lifestyle you want.

If you’re in your 40s or older and haven’t saved much (or anything) yet, you may face a challenge in building the retirement fund you need. The shorter your time frame, the less room you have for error. But don’t panic — it’s never too late to start saving. You may still be able to secure a comfortable retirement for yourself, but you may have to make some tough choices to do so.

If you’re getting a late start, save as much as possible. The more you save, the more you’ll have when you retire. Try to maximize your contributions to IRAs, 401(k)s, and other tax-advantaged vehicles. Then supplement your retirement fund with mutual funds, savings accounts, and other investments. And if you fear you’re getting too late of a start, or you’re not sure where to start, consult a financial professional. He or she can help you map out a plan to bridge the gap between where you are now and where you need to be when you retire.

Saving for your retirement

START

First contribute to employer sponsored retirement plans, at least enough to get full company match

 Company match is free money  You may forfeit match if you don't work for a given length of time  Some plans allow Roth contributions tax free when withdrawn, earnings tax free if “qualified distribution”
 Dollars grow tax deferred until withdrawn  Systematic payments from your paycheck — you’ll hardly notice  Some plans allow pre-tax contributions resulting in an immediate tax savings
  Investment choices might be limited  

Remaining money ↴

Contribute to Roth and/or traditional IRA

 Many investment options  Dollars grow tax deferred until withdrawn  Some plans allow Roth contributions tax-free when withdrawn, earnings tax free if “qualified distribution”
 Traditional IRA contribution may or may not be tax deductible  Can contribute up to $5,500 in 2017 ($6,500 if age 50 or older) (Unchanged from 2016)  

Remaining money ↴

Other options: Annuities, stock plans, life insurance, nonqualified deferred compensation, stock, mutual funds, etc.

 Annuities, life insurance, and other options have unique tax advantages  Lower capital gains tax rates make some equity investments more attractive for retirement planning  Some options may be complex, and timing of taxable events may be difficult to control

 

KEY

 Definite plus  Need more info  Potential disadvantage

Employers can allow employees to make after-tax “Roth” contributions to the employer’s 401(k) or 403(b) plan. Qualified distributions of these contributions and related earnings are tax free.

Individuals age 50 and over may make additional $1,000 IRA catch-up contributions.

 

Retirement Savings Tip provided by RBFCU Investments Group: When it comes to transitioning into retirement, timing really is everything. The age at which you retire can have an enormous impact on your overall retirement income situation, so you’ll want to make sure you’ve considered your decision from every angle. In fact, you may find that deciding when to retire is actually the product of a series of smaller decisions and calculations. Although a general guideline, depending on your desired retirement lifestyle, you may need anywhere from 60% to 100% of your current income to maintain your current standard of living.

Plan for tomorrow. See a financial advisor today.

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RBFCU Investments Group LLC is a wholly-owned subsidiary of RBFCU Services LLC. RBFCU Services LLC is affiliated with Randolph-Brooks Federal Credit Union (RBFCU). Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA / SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-2133218.1-0518-0620

Article prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018; February 07, 2018

Illustration prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018; February 07, 2018