Even though we are constantly thinking “save for retirement” most people limit their strategy and ignore using individual retirement accounts or IRAs. Why? Your employer and the government have made it simple and automatic for you to save and invest the maximum amount in your company plan. Most people have a limit to the amount they can save and how they allocate between tax structure will make a difference.
Here are some factors to consider for the dollars you can save for retirement.
Why now? April 15th is the cut off for 2017 Traditional and Roth IRA contributions. We can help you understand the terms and restrictions for contribution to an IRA.
Are you capturing the full benefit of your employers matched savings? Matching is an employee benefit. Go ahead and take every dollar available. This benefit doubles your amount up to the match limit. Over a career of saving and matches, the balance will grow and be a significant nest egg.
Should I max out my savings in the tax-deferred account? The answer seems easy, but easy isn’t always the best answer. Before socking away every dollar you can save into a tax-deferred account at work ask yourself, do you have tax diversification working to minimize taxes now and in retirement?
Layers of accounts can add confusion. When saving for retirement consider tax diversification, how much you can/need to save and the investment strategy of your assets. In total, these concepts can create a headache. DIY has a time and place, it may not be right for retirement.
Self-employed workers, retirees and the unemployed are at a tremendous disadvantage. Many accounts that self-employed, unemployed and retirees have do not have ERISA protection. Having an account with a discount broker, such as Fidelity or Vanguard does not guarantee ERISA protection or put your interest first. Partner with a financial advisor that is a fiduciary and work with them to build your solution. Choose and govern the right partner so that the cost-benefit relationship favors you.
You may not be using a Traditional or Roth IRA and you probably qualify for one, do you have a reason why not? A comprehensive retirement strategy is essential and IRAs remain an important tool to use in your retirement saving arsenal. Need help evaluating your plan, investing your assets and building tax diversity? Contact us today, and we can get talk about building a partnership.
Author: John Kirby