It’s a new year again. For many, that means it’s once again time to assess life and identify areas for improvement. Of course, this period of reflection usually results in a list of resolutions or goals. Many people resolve to eat healthier or exercise more frequently. Others may focus on their education or career development. Some people may use this time to look at their house and plan out various home improvement projects for the coming year.
Financial goals are also a popular choice for New Year’s resolutions. The beginning of the year is the perfect time to analyze your financial situation and develop a list of action items. A regular annual financial checkup can help you stay on top of potential risks and on track to meet your biggest financial goals.
Have you used a traditional IRA to save for retirement? You’re not alone. Traditional IRAs are among the most popular retirement savings vehicles. Much of their popularity is due to their unique tax treatment. You can deduct your IRA contributions, and all growth is tax-deferred as long as it stays in the account.
Of course, you can’t avoid taxes on your traditional IRA growth forever. Distributions from your traditional IRA are treated as taxable income. That means that in retirement, your traditional IRA income could create a tax liability and possibly even push you into a higher tax bracket.
Some people delay traditional IRA distributions to avoid the tax hit. However, the latest you can delay your distributions is to age 70½. At that point, you have to begin taking required minimum distributions (RMDs).
One of the essential goals of any retirement strategy is to ensure your future financial stability when you’re no longer working. A key way to do this is to reduce your expenses in retirement as much as possible.
Taxes are one of the biggest expenses retirees often face. As a retiree, you’ll likely be required to pay taxes on Social Security, pension benefits, retirement account distributions and more. This significant tax bill often takes many people by surprise, and it can critically affect your retirement savings.
For nearly your entire adult life, you’ve focused on accumulating assets for retirement. When you stop working, though, your focus will likely turn to how you should generate income from those assets. It’s not a simple task. There are a number of factors and variables that may play into the decision.
Did you just switch jobs? If so, this is probably a busy and exciting time. You have to adjust to your new company and role and possibly change your daily routine. You might have even accepted a job in a new part of the country or in a brand-new industry. Switching jobs can be stressful and chaotic, but it’s also a common part of today’s economy.
Looking for ways to save for retirement outside of your 401(k) or other employer-sponsored plan? You may want to consider an IRA. An IRA is a popular tool for saving for retirement in a tax-advantaged manner.
There are several different types of IRAs available, with two of the most popular being the traditional IRA and the Roth IRA. If you’ve never used an IRA before, you may be unfamiliar with how they work. You might also be unsure of which one is the right one for you. Each has its own benefits and considerations, so it’s important to weigh them carefully before making your selection.