Financial planning for retirement is one of the most important things you can do for yourself and your family. It is important to begin saving as early as possible in your career and continue contributing to the financial plan as long as possible. Financial planning for retirement can be accomplished in a variety of ways depending on your income and age. You can work with an investment advisor to develop a comprehensive financial plan that will grow with you. You can find hundreds of available planning advisors online to help you with your portfolio. Find one now and start planning your financial future today.
Financial planning for retirement was easier in the days when companies offered long-term retirement benefits for employees who had tenure. Unfortunately, many companies have begun to cut this program from their budget leaving many employees scrambling to secure their financial future. There are many programs available today that can provide individuals with the financial security they need for their golden years.
401k plans are one of the best options for retirement planning. Many employers offer these financial programs to their employees as a savings and investment program. The employee can contribute a portion of their pre-tax salary into the program and then control the investments of the contributions into mutual funds, stocks, bonds, and other options. Some employers will match all or a percentage of the employee's contributions. The portion of the employers contribution is sometimes controlled by the employer until the employee is 100% vested with the company. Vesting is earned with time. Once the employer reaches the applicable amount of time, the employer's invested funds then belong to the employee even if they leave the company.
Upon retiring, the 401k monies must be distributed by either cashing them out, or moving them to another retirement plan. Cashing out a 401k can come with severe penalties especially if the employee is not of retirement age. If the employee is changing jobs, they can move the money into the new employer's 401k account or they can move it to an IRA program to avoid the penalties. Upon disbursement of the 401k, if it is not rolled over into an approved retirement plan, the employee will be responsible for the taxes for the contributions and the earnings in the account.
Financial planning for retirement can also include an IRA plan. A traditional IRA is a program that anyone who has an income can contribute into. These programs may be held by a bank or brokerage. The investments include whatever that particular entity allows. A bank for instance, may allow investments into CDs, while a brokerage firm might allow investments into stocks, bonds, or mutual funds. The contributions from an IRA account may be tax deductible depending on the eligibility of the contributor, while the earnings are tax deferred meaning that you will pay taxes upon disbursement of the funds for personal use.
Another IRA plan offered is the Roth IRA. Like a traditional IRA, the funds can be invested in a variety of stocks, bonds, or mutual funds. Unlike the traditional IRA, the contributions are not tax deductible. Roth IRAs come with a seasoning period during which the contributions cannot be withdrawn without incurring penalties and taxes. Once the seasoning period is met, the contributions are no longer subject to the penalties and taxes upon disbursement. The earnings of a Roth IRA program can be withdrawn without penalties or taxes if the seasoning period and the age of the account owner meet the applicable rules of the program. Talk to the advisor who is helping you with financial planning for retirement to determine whether a Roth IRA plan is the right program for your needs.
Financial planning for retirement is an important step towards securing your future. Because of this, it is wise to secure the services of an investment advisor to help you meet the goals you have in a way that works within the budget you have. When financial planning for retirement is necessary, an investment advisor can provide you with the expertise that comes with years of education and practical knowledge that will be invaluable as your needs change. You can find a planning advisor in your area by shopping online today.
Financial planning for retirement is a great way to protect your future and the future of your loved ones. If you start planning early, you will be surprised at how fast your savings will increase over time. Work with an investment advisor to determine what the best savings strategy is for the needs you have. Whether your financial planning for retirement utilizes a 401k, an IRA, or a combination of the two, you will certainly appreciate the dividends in the years to come.
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