STAMINA STRENGTH: EVEN AT 50 SAVING FOR RETIREMENT IS POSSIABLE

FREE TRAFFIC

FREE Viral marketing tool generates FREE traffic / visitors to your website automatically. Click here to find out more.


Thursday, June 8, 2017

EVEN AT 50 SAVING FOR RETIREMENT IS POSSIABLE










We do, however, recommend that everyone review their individual situation by doing some tax planning. Having a distribution plan in place can help you get the cash flow you need while lessening the tax bite on those treasured retirement dollars.

Even starting at age 50, it is possible to save more than $1 million for retirement, according to research released in May by the American Association of Individual Investors (AAII). Or looking at it another way, even for those who have paltry savings by the time their 50th birthday rolls around, adding $1 million to their nest egg from that point forward is attainable. (Many 401( k) participants save less than the 15% of pay that is often recommended, data from Vanguard and Fidelity show.).
The chart below from the AAII shows five different scenarios of how much people can accumulate by saving from age 50 to age 70:.
- You contribute the maximum to an IRA, including a catch-up contribution ($ 6,500 per year).
- You save $1,000 a month (setting aside $12,000 a year).
- You make the maximum 401( k) contribution, including the catch-up contribution allowed for those 50 or older (a total of $24,000 a year).
- You make the full $18,000 a year 401( k) contribution but skip the catch-up provision.
- You make the maximum $5,500 IRA contribution but skip the catch-up provision.
In each case, Charles Rotblut, a vice president at AAII and editor of the AAII Journal, assumed that you would earn 8% a year from a stock and bond portfolio. The 401( k) and IRA contribution limits are based on the rules for 2017.
The projected account balance at 70 years old ranges from $1.3 million for a person who maxes out his or her 401( k) including catch-up contributions to $300,000 for a person who saves only to the basic $5,500 annual IRA limit.
Of course, for people who have been half-hearted savers, putting aside as much as $24,000 a year, even with a substantial paycheck, won't be easy.
For people who don't have a history of saving, it may also require far bigger changes like downsizing housing costs or taking a second job. (Some diligent savers take similar moves in order to afford early retirement.).
" People need to look for ways to both consider and save what they can do to boost their income, whether it's getting a promotion where they're at, changing jobs, or, in some aspects, considering having a part-time job in addition to their full-time one," Rotblut said.
A recent study found that more Americans than ever believe they will need at least $1 million for a comfortable retirement. Dwelling on that target number will make the task more daunting, Rotblut said.
" Worrying about the big number they're going to reach, it's going to seem almost unattainable," he said. Instead, people should focus on finding ways to save money because "they'll realize they'll make far more progress than what they think will be possible.".
Which Retirement Accounts to Withdraw From.




 Those funds are considered ordinary income if you are taking distributions from your retirement account. Monitor how much you are taking, and if you are getting close to moving into a higher tax bracket and still need cash flow, you can take some distributions from the tax-free pile, your Roth accounts.

In the above scenario, our fictitious retired couple has three buckets of money to choose from. They have their after-tax money from the sale of the house. This money has already been taxed at some point, and any cash flow that comes from this bucket is not taxable again, except for the interest, Roth IRA accounts they funded in the years leading up to retirement.

By managing which bucket you take money out of to fund your cash flow needs, you can, to some degree, control the tax consequences of your retirement income. Any cash taken from this account is not taxable, except for tax that may be due on the interest, dividends and capital gains.

Even starting at age 50, it is possible to save more than $1 million for retirement, according to research released in May by the American Association of Individual Investors (AAII). (Many 401( k) participants save less than the 15% of pay that is often recommended, data from Vanguard and Fidelity show.).
(Some diligent savers take similar moves in order to afford early retirement.).
By managing which bucket you take money out of to fund your cash flow needs, you can, to some degree, control the tax consequences of your retirement income. Having a distribution plan in place can help you get the cash flow you need while lessening the tax bite on those treasured retirement dollars.

No comments:

Post a Comment