Posts Tagged ‘retirement plans’

Will The President’s New Tax Plan Impact your Retirement?

Monday, October 30th, 2017

 

It was reported last week that Congress was considering the option of reducing the amount of income that Americans could save in their tax-deferred retirement accounts in order to partially pay for the President’s tax reform plan. For now, that idea is unconfirmed by the Trump Administration, but remains a concern for every-day Americans, and what it means for their retirement.

The tax plan

The White House proposed a tax reform bill that would cut corporate and individual tax rates. The Trump administration says the cuts would spur economic growth and help boost people’s incomes. The emerging plan would also get rid of several tax deductions in order to help pay for the plan, leading some to worry that some of the most popular would fall away. The President indicated on Monday the 23rd of October that he has no plan to limit people from using pre-tax savings for their retirement, as they can now in their 401K and IRA plans.

Roth IRAs

One version of the new tax plan would have lowered annual contribution limits for 401Ks. This could force savers to rely more heavily on other retirement plans like Roth IRAs. The way a Roth IRA works is that money can be withdrawn in retirement free of taxes since taxes were paid up front, while withdrawals from 401K plans are taxed. Leaning more on Roth IRAs would create more tax revenue up front for the government, and is seen by some as an accounting gimmick that creates revenue earlier and helps pay for the broader tax reform bill.

What the President has said

While Trump said the traditional 401K plan will stay put under the GOP tax plan, it’s not clear if that also means no limits will be placed on future 401K contributions.

Those on the outside of the Administration have speculated that changing the tax treatment of 401Ks may have been an attractive way for Republicans to raise revenues because of the total involved. The Treasury department stated that they expect such plans will lower revenues by almost $600 billion over the next five years

How Much Money Should You Have in Your Retirement Accounts?

Monday, February 17th, 2014

How much do you need to retire

Saving for retirement can seem so frustrating and out of your hands. There are so many things you can do to make sure you are involved with your own retirement. You can even invest your retirement how you want with a with a self directed account. Self directed accounts can be IRA or 401Ks. What is great about a self directed account is that you can invest in things like real estate and gold. There is plenty of other things you can use your IRA to invest in with a self directed account. If you are worried about invest in the stock market then a self directed account is a great option. Once you have a self directed account then what? Start investing!! Even when investing with a self directed account it is important to remember about your end goal of securing a great retirement.

We have extensively gone over retirement and how to prepare for that ever so exciting, yet potentially stressful time. The more you are prepared for retirement the less stressful it will be. Why is it stressful? It is stressful because if you haven’t prepared well enough then you may be wondering if you have enough money in your retirement accounts? This is what most of us worry about. With a self directed account it isn’t always about how much money is in your accounts but what are your assets worth?  Either way knowing you have enough to get through your retirement without running dry is important. Today we will be discussing how much money you will need when you actually do retire.

As knowing a perfect figure can be quite tricky and each situation can rule different outcomes it is wise to sit down with a financial planner to make sure you are on the correct track for your situation. A few of the factors that need to be considered when looking at your situation are:

When You Retire

When you retire can have a huge impact on your retirement income. Just speaking of when you will start collecting social social security between 62 to 70 can be dramatic. Say you earned $50,000 a year and turned 62 in 2013. You could collect roughly $1,011 a month as a single. If you waited until 66 you would be able to collect roughly $1,420 a month (in today dollars). If you started collecting at 70 you would collect roughly $1,972 a month (as before it is in today dollars).

Where you Retire

$300,000 can go a lot farther in places like Daytona Beach, Florida, Pocatello, Idaho, Greenville, S.C. than it can in San Francisco, California, or New York, New York. Make sure you know the cost of living where you are retiring. You may find that you need to adjust your savings plan depending.

What You Plan To Do While Retired

This is an obvious but often overlooked aspect of retirement. If you plan to continue the same lifestyle that you typically had before retirement you should be ok. If you plan to travel and do things that you never did while working you may need to boost your retirement savings plan.

How Long You’ll Live

This is another huge thing to be aware of when retiring. Of course we never know what is going to happen but you should plan for the long haul. There are different ways you can judge how long you will live. There are expectancy calculators and the IRS has a table to guestimate how long you will live. Using those guestimates you’ll be able to know how long you’re going to need money which will be a great insight to figuring out how much you’ll actually need.
With so many variables that go into figuring out how much you actually need is it even possible to have any idea what I should be saving now? Yes, it is very possible to have a good idea of what you need. There are plenty of calculators that help you with your retirement. There is also a general rule of thumb that can give you a good starting point.
  • Age 35: Have saved as much as your current salary.
  • Age 45: Have three times your salary saved.
  • Age 55: Save at least five times your salary.
  • Age 67: When it’s time to retire, a great goal is to have saved at least eight times your ending salary.
This is a great starting point and if followed can give you a very solid basses for your retirement. It still doesn’t beat out getting as detailed as possible though. Look at every aspect of your life and figure exactly how much you spend and do your best to figure out future spending. Again, the more detailed detailed the plan the better. If you follow that detailed plan you are much more likely to be able to go through retirement lasting on your own money. you need to very wise to dig as deep as you can and to get as detailed as possible.

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