Retirement Planning



Do you need to do it? Is it important? Yes, it's important because its your future. So let me tell you how you can do it in the best possible way. Fist of all you need to check whether you are covered under any retirement plan related to your employment means what is the retirement plan your employer has offered you. Most of the retirement plans are authorized under internal revenue code such as Section 401(K) or 403(b). As on date there are many retirement plans are available. You can opt for the plan which suites your retirement planning requirements. Let's discusses the most common plans.

401k retirement plans - The 401(k) plan is a employer retirement plan under section 401(k) of the Internal revenue Code in the USA mainly by private sector companies.

A 401(k) plan allows an employee to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee may decide to have a section of his or her salary paid directly into his or her 401(k) account. In participant-directed plans, the employee can choose from a number of investment options, usually an assortment of mutual funds that emphasize stock, bonds and a mix of the both. Many companies' 401(k) plans also offer the option to purchase the company's stock.

403(b) retirement Plans - The 403(b) plan is a tax advantaged retirement savings plan available for public education organizations, non-profit employers and self-employed ministers in the United States. The tax treatment in this plan is similar to 401(k) plan. In simple words it can be said than an employee salary deferrals into a 403(b) plan are made before income tax is paid on it, and allowed to grow tax deferred until the money is taxed as income when taken out of the plan.

The Savings incentive match plan for employees (SIMPLE IRA) - This plan servers companies with 100 or less than 100 employees and the good this is that it also includes the self employed people for self employed retirement plans also. The plan may be structured like 401(k plan but the disadvantages is that IRA contribution limit does not apply on this plan.

Simplified employed Pension Plans (SEP-IRA) - This is for a comply with 25 or less employees. The plan may be structured like 401(k plan but the disadvantages is that IRA contribution limit does not apply on this plan. This is something we can say retirement plans for small business.

Top 5 Keys to Retirement Planning and FREE Retirement Calculators!



Do you know how much money you will need in retirement? Like many concerned Americans, you may have no idea. Here are a few pointers to get you on the right track.

POINT 1:The BEST planning strategy for retirement funds is to start EARLY. It is never too early to start investing for retirement. You should really think about that. If you have the money to INVEST young and you do, there is a great chance that you will be able to RETIRE young. Even a couple of years can make the difference of several hundred thousand dollars once you factor in interest. You should set a goal of setting aside a certain amount of money every month from your paycheck to put into your 401k. Although with the economy right now, it might seem difficult. Try to cut back on some luxury items you could do without. Eat out less, skip that trip to your favorite place for a cup of joe. If you really take it seriously, you can do it!

POINT 2:Choosing the appropriate individual retirement accounts. At a time when the economy is unstable, this is important. Most of the experts agree that the Roth individual retirement accounts are the best alternative to traditional individual retirement accounts since not everyone can qualify for the others and is geared towards those who have a lower tax bracket upon retiring. A Roth individual retirement account is based on contributions made after taxes and the taxes are not deductible. Traditional individual retirement accounts, on the other hand, are based on a tax deduction first and then the tax-deferred funds begin to grow. The difference between this and the Roth IRA is that if your salary increases.....more taxes to pay.

POINT 3: Retirement Planning Calculators are an essential tool. A common mistake among pre-retiree's is that they think that they won't need as much money to live on once they retire. WRONG! Unfortunately,the cost to live does not decrease once you are retired. This is when Retirement Planning calculators come into play. These FREE calculators help you to know where you are now and what you will need to save to meet all of your needs once retired. It is not exact, but it definitely helps you to see what you need to have your dream Retiree lifestyle.

POINT 4: Have a plan for the allocation of your portfolio assets. A weak portfolio limits what you can pass onto your family. You may have to make withdrawals at a percentage rate that is higher than your portfolio is earning. You want to make your assets last as long as you do, or longer. In the event that your retirement income won't cover your post retirement expenses, the earnings from your portfolio will be the difference.

POINT 5: Get help from a reputable Retirement Planning service.The best way to look for retirement planning services is to ask your friends, family and coworkers if they can recommend anyone. Here you can learn the good and bad of many different companies, With none of the headache involved in finding out for yourself. Online retirement planning services are becoming more and more popular, with most national banks and financial services offering information and tools online. You can also check with your place of employment. Many companies are offering lists of recommended planning services. Finding the right retirement planning service is an important part of making sure you have the retirement that YOU deserve.
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