Tips for Prepping Your Retirement Fund

Retirement is a long-awaited reward for years of hard work. However, only some people have enough to live their desired lifestyle in their retirement savings account. 

Starting early is key to building a sufficient retirement fund, but there is always time to begin. 

Whether you're just starting or are already a seasoned investor, this blog post will provide valuable tips and strategies for prepping your retirement fund.

Set Realistic Goals

Before starting a retirement account or investing your savings, it is essential to determine your retirement goals. 

Do you want to retire earlier or later in life? What is the lifestyle that you would like to lead during retirement? What are the expenses you can expect during retirement? 

Setting realistic retirement goals can help you determine how much money you will need to save and for how long.

Start Now

The earlier you start saving and investing, the more time you have to build your retirement fund. Ideally, you should begin saving in your 20s, but if you still need to start, don't worry. 

Start by automating your savings, setting aside a portion of your paycheck for your retirement fund, and increasing your contributions regularly. 

The earlier and more frequently you contribute to your account, the more time it has to grow through compound interest.

Diversify Investments

It is essential to have a diverse portfolio of investments to reduce the risk of loss during market downturns. Investing in stocks, bonds, mutual funds, and index funds can help you achieve a well-diversified portfolio. 

Researching and consulting with a financial advisor is important to understand each investment's potential risks and rewards.

Consider Tax-Advantaged Retirement Accounts

Several retirement account options are available, such as 401(k), IRA, Roth IRA, and SEP IRA, to name a few. 

Each account has different tax implications that can affect your retirement income. For example, Roth IRA contributions are taxed upfront, while traditional IRA contributions are tax-deductible. 

A financial advisor can help determine which retirement account or plan, such as a 401K to Gold Retirement Plan.

Re-Evaluate and Adjust Your Retirement Plan

It's important to evaluate your retirement goals and investment options periodically. Your retirement plan may need to be adjusted accordingly as your life changes. 

Having a solid idea of how much you will need to retire comfortably is important, but there are no guarantees. 

Adjustments to your retirement plan may be necessary as life circumstances change or investments underperform. Regularly reviewing and re-evaluating your retirement strategy can help you stay on track.

Prepping your retirement fund may initially seem overwhelming, but it is achievable with the right strategies and guidance. 

By setting realistic retirement goals, starting now, diversifying your investments, considering tax-advantaged retirement accounts, and regularly reviewing and adjusting your retirement plan, you can lay the foundation for a comfortable retirement. 

Remember that preparation is key, and there is always time to start. Seek professional advice and act today to ensure a financially secure future.

Steps You Can Take to Grow Your Savings Before Retirement

No one knows how long they will live, but most people want to ensure they have enough money saved to cover their retirement costs. There are many steps you can take to help make sure you have enough money saved when you retire.

Save Early and Often

It may seem like a no-brainer, but one of the best things you can do to ensure a comfortable retirement is to start saving as early as possible. 

The earlier you begin saving, the more time your money has to grow. For example, let’s say you start saving $200 per month at age 25. If you earn an annual return of 7%, by the time you retire at age 65, you will have nearly $500,000 saved. 

However, if you wait until age 35 to start saving, even investing the same amount each month, you would only have about $250,000 saved by retirement – half as much as if you had started 10 years earlier. 

Time is your friend when it comes to growing your savings! If you have questions about how much money you should personally be saving each year, work with a wealth management professional.

Invest in Yourself

Investing in yourself is one of the best investments you can make. When it comes to retirement savings, there are a few different ways to invest in yourself. 

One way is to contribute to a 401(k) or another employer-sponsored retirement plan. If your employer offers matching contributions, that’s even better! Another way to invest in yourself is to open an Individual Retirement Account (IRA). An IRA is a savings account that offers tax advantages for those saving for retirement. 

There are two types of IRAs – traditional and Roth – and which one is right for you depends on your current income and tax bracket.

Live Below Your Means

One important step you can take to grow your retirement savings is to live below your means. This means spending less than you earn and Investing the difference. 

When you live below your means, it frees up extra money that can be used to save for retirement or pay down debt. 

It may not be easy, but living below your means now will pay off later when you don’t have to worry about where your next paycheck is coming from.

There are a number of steps you can take to grow your savings before retirement. Save early and often, invest in yourself, and live below your means. By taking these steps now, you can enjoy a comfortable retirement later.

3 Alternatives To Investing In A 401K

If you work for an employer that offers a 401K plan as part of your benefits package, this can be a great way for you to build up quite a nest egg while you are working.

In most situations, employers will match an employee's 401K contributions, allowing wealth to accumulate much faster. However, there are also plenty of alternatives to a 401K.

If you're wanting to explore additional ways to make your money grow, here are three alternatives to consider.

Roth IRA

One of the most popular investment tools available today, a Roth IRA can be a great alternative to a 401K. First, it allows your money to grow tax-free, which could save you thousands of dollars over the years. 

Also, when you retire, a Roth IRA lets you withdraw any or all of your money tax-free as well. If you want to use your contributions for qualifying expenses such as college tuition or to buy a home, you can do this with a Roth IRA. As for annual contribution limits, these range from $6,000 if you are under age 50 to $7,000 if you are age 50 or older. 

It is ideal to work with a financial advisor who can look at your needs and income to provide you with the right amount to invest for your goals. Additionally, they can help you look at your income and current debt to recommend that the right percent of your income should be put into the investment. 

Additionally, they can provide you with recommendations for what percent of your portfolio should be used in other types of investments, not just a Roth IRA.

Real Estate

Always considered to be one of the best and safest investment options by many in the industry, investing in real estate may put you well ahead of others who are relying on a 401K. 

When you invest in real estate, you can do so for either short-term cash flow or long-term appreciation, depending upon your financial needs. Once you own investment property, you can build equity in the property, sell it whenever you wish, or keep it and pass it on to your children or others when you die.

Invest in a Business

If you have an eye for business, you may want to take that money you would have put into a 401K and instead invest it in a startup business. 

Since new businesses are started every day, many entrepreneurs are always seeking financing to get started. Once you've looked over the business plan and have confidence it will be a success, invest your money. 

If all goes well, you could find yourself making more money at this investment than you ever thought possible.

While there is certainly nothing wrong with investing in a 401K, there's also nothing wrong with exploring other investment opportunities. 

Once you do so and learn more about a Roth IRA, real estate, or startup businesses, you may find the money you would have put into a 401K will grow more rapidly in these other options.

How Retirement Can Affect Your Taxes

As you plan for and ultimately begin your retirement, you'll be thinking about the many things you want to do and places you want to see. But to see many of these plans come to fruition, it takes money. 

Though you've been a careful planner for many years, you may not understand just how many ways retirement can affect your taxes. To help you make the right decisions regarding your retirement accounts and taxes, here are some important tips to remember.

Paying Income Taxes

If you assumed paying income taxes was a thing of the past once you retired, you may need to rethink this idea. Should you have income that is not tax-exempt, filing and paying taxes will still be part of your life each year. 

As of the tax year of 2020, if you filed jointly with your spouse who is also at least 65 years old and your income exceeded $27,400, this income could be taxed. Also, if you have income from a part-time job, you may meet the threshold necessary for you to pay taxes.

Maximize Benefits with Roth IRA

Since any contributions you make to a Roth IRA are done so with after-tax dollars, this means any withdrawals you make from this account during your retirement are tax-free. 

By working with a tax preparation expert on this, you can enjoy a steady retirement income without paying income taxes. Be sure to find a professional since handling your taxes incorrectly could result in serious legal consequences.

Take Advantage of Tax Credits

Once you retire, take full advantage of any and all tax credits that are available for you and your situation. For many retirees over age 65, the Credit for the Elderly or Disabled can be very helpful, especially if both you and your spouse are over age 65 and have a lower income.

Self-Employment and Retirement

If after retiring from your 9-5 job you decided to become self-employed, you can take advantage of some deductions regarding Medicare. 

In fact, you can deduct your Medicare Part B and Part D premiums, so long as you do not currently have access to healthcare through your spouse's employer. 

Also, even if you do not itemize on your taxes, you are allowed to deduct your costs for Medicare Advantage or any supplemental Medicare coverage, which could save you thousands of dollars per year.

Since you spent so many years planning for your retirement, it makes sense to do the same regarding your taxes after you're retired. From maximizing your Roth IRA contributions to knowing which tax credits you can take, you'll soon have even more money to spend on the fun things in life.

What is a 401k Plan and How Do I Calculate It?

401k plan is an employer-sponsored retirement plan in the U.S and several other countries. It was named after a section of the United States International Revenue Code. Money put into the 401k account is usually deducted from the individuals' taxable income.

The amount is only taxed when withdrawing which happens after the age of 59. If the money is to be withdrawn any earlier, both income and an extra charge of 10% penalty are owed. About 401K earnings It's never too early to begin saving to secure a comfortable retirement.

You should know that the sooner you can start saving and invest in a 401k account, the more you are able to accumulate interest over the year. It is advisable to keep a keen eye on how you are doing by calculating your earnings occasionally. 




This can be helpful since you might need to make changes on your investment based on your tolerance for risk, age and the number of years before you retire. Calculate your earnings One of the best tools you can use to secure a comfortable retirement is a 401K plan.

A 401K plan provides you with 2 very important advantages. First, all your contributions and earnings are never subject to tax. the second advantage is that many employers often provide matching contributions to your account which ranges from 0% to 100% of your personal contributions.

Here is how to calculate your 401k earnings

1. You will need a copy of your most recent 401K statements. These statements are mostly sent quarterly. 

2. Note the initial balance, the amount your employer contributed to your account and the amount of contribution you made. Sum up all these factors to get their total.

3. Subtract the total you got from step 2 above from your end balance. The amount you find is your gain for that period.

4. Divide the amount from step 3 above (Your gain) by the total calculated from step

5. Multiply the result you got by 100 to find the percentage gain for your 401K account for the specific period.

Example: If your initial balance plus total contributions are $15,000 and you got your gain as $500, your percentage gain for that period will be approximately 3.33%. If you have a quarterly statement, then you will multiply the figure by 4. You will get an annual percentage gain of 13.32%.

You can also calculate your income tax on your 401K withdrawal. Here is how to do it and estimate your expected amount.

1. Estimate your annual taxable income. To do this, add up all your taxable income for the year like salaries, wages and interests then subtract any taxes such as standard deductions.

2. Find your tax bracket in the IRS publication 17 based on the estimated taxable income.

3. Multiply the amount in your 401K account with your marginal income tax rate.

4. If you are taking a non-qualified distribution from your federal 401k plan, add a 10% penalty to the amount of your federal taxes. Do not make any exception. All non-qualified distributions are distributions before the age of 59 1/2.

5. Multiply your 401k plan withdrawal amount by your tax rate.

6. Finally, add your federal and taxes with an early withdrawal penalty to get your total taxes on your 401K withdrawal amount.

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Looking Forward: Investments, Assets and Your Retirement

Planning for retirement is not something that should be put off to the last minute or after the company farewell party. There are many things to do shortly before you retire and some things you should start as soon as you enter the work force. It is not original, but it is never too early to start planning for your future.

Beginning At an Early Age

If you are just entering the work force and not making a whole lot of money, it is still not too early to get into the practice of savings. Decide to put five percent of your paycheck into savings. 

As your income grows, continue to save. Try not to touch it. This is the first step toward reaching the goal of having a comfortable and enjoyable retirement.

Take Advantage of Any Program Your Employer May Offer

If the company you work for offers a 401K plan, participate in it. Contribute as much as possible to the plan. Usually, there is an option of making taxable or tax deferred contributions. 

Tax deferred may give you a little more spending money when you first begin investing, but it is not going to be a big help regarding income taxes when you retire.

Open an IRA

The individual retirement account allows you to put a portion of your income in an account that will draw interest. The contributions are tax deferred. There is also the possibility of opening a Roth IRA. In this plan, the money you contribute is taxable. However, the money you earn will be tax-free when you withdraw it. 

Regardless of which plan you open, do not go to the nearest bank and take whatever fixed rate is being offered. Talk to a financial adviser or stockbroker and determine how the money can be invested to generate the best yield with a reasonable degree of security.

Looking Forward: Investments, Assets and Your Retirement

Planning for retirement is not something that should be put off to the last minute or after the company farewell party. 

There are many things to do shortly before you retire and some things you should start as soon as you enter the work force. It is not original, but it is never too early to start planning for your future.

Beginning At an Early Age

If you are just entering the work force and not making a whole lot of money, it is still not too early to get into the practice of savings. Decide to put five percent of your paycheck into savings. 

As your income grows, continue to save. Try not to touch it. This is the first step toward reaching the goal of having a comfortable and enjoyable retirement.

Take Advantage of Any Program Your Employer May Offer

If the company you work for offers a 401K plan, participate in it. Contribute as much as possible to the plan. Usually, there is an option of making taxable or tax deferred contributions. 

Tax deferred may give you a little more spending money when you first begin investing, but it is not going to be a big help regarding income taxes when you retire.

Open an IRA

The individual retirement account allows you to put a portion of your income in an account that will draw interest. The contributions are tax deferred. There is also the possibility of opening a Roth IRA. 

In this plan, the money you contribute is taxable. However, the money you earn will be tax-free when you withdraw it. Regardless of which plan you open, do not go to the nearest bank and take whatever fixed rate is being offered. 

Talk to a financial adviser or stockbroker and determine how the money can be invested to generate the best yield with a reasonable degree of security.

Buy Life Insurance

Term life insurance starts out cheap. However, the premium increases over time. If you outlive the term, you or survivors get nothing. If it was an employer's policy, and you change jobs, there will be no refund. 

You can buy a 20-year paid-up whole-life policy for a higher, but fixed, monthly premium. If married, purchase a policy for yourself and your spouse. If there is an early death, the benefits are tax-free and can cover funeral expenses and help with the mortgage payments.

Be Diligent

Check your investments at least every month. Talk to your financial adviser or broker to get their take on where the economy is heading. Do not invest all your funds in one stock or company. At any given time, some of your investments could be threatened by a change in the financial markets. It may be necessary to make some adjustments.

Simply stated, to plan for your future you have to invest money you are earning today. Social Security in some form will be around 40 years henceforth and probably longer. However, it will only cover a fraction of your expenses. Do not buy over your income. That BMW in the showroom looks great, but the Chevrolet will get you to work. 

Think about the things for which you are planning. Is it your own retirement? Are you saving for your children’s college education? Do you plan to move to an exotic island before you are 50? Prioritize and be reasonable in what you plan to do. Watch your investments. Communicate with your financial adviser on options that may develop. Do not depend on a company retirement plan. 

You may have several different jobs during your working career, and the retirement plan may not follow you. If a company pension comes your way, you are ahead of the game. However, if it disappears, you can still be in good financial shape if you start early in planning for the future.

Term life insurance starts out cheap. The premium increases over time. If you outlive the term, you or survivors get nothing. If it was an employer's policy, and you change jobs, there will be no refund. 

You can buy a 20-year paid-up whole-life policy for a higher, but fixed, monthly premium. If married, purchase a policy for yourself and your spouse. If there is an early death, the benefits are tax-free and can cover funeral expenses and help with the mortgage payments.

Be Diligent

Check your investments at least every month. Talk to your financial adviser or broker to get their take on where the economy is heading. 

At any given time, some of your investments could be threatened by a change in the financial markets. It may be necessary to make some adjustments.

Simply stated, to plan for your future you have to invest money you are earning today. A specialist from Pinnacle Financial Partners recommends taking a look at your financial assets as a whole to determine what they can offer for your future plans. 

Social Security in some form will be around 40 years henceforth and probably longer, however, it will only cover a fraction of your expenses.

Think about the things for which you are planning. Is it your own retirement? Are you saving for your children’s college education? Do you plan to move to an exotic island before you are 50? Prioritize and be reasonable in what you plan to do. 

Watch your investments. Communicate with your financial adviser on options that may develop. Do not depend on a company retirement plan. You may have several different jobs during your working career, and the retirement plan may not follow you. 

If a company pension comes your way, you are ahead of the game. However, if it disappears, you can still be in good financial shape if you start early in planning for the future.

Personal Finance Tips for Millenials

saving and spending (Photo credit: 401(K) 2013)

According to a 2007 study by the American Psychological Association, 73% of those surveyed claimed money is a primary source of stress in their lives. But personal finances don’t have to be a formidable enemy to avoid. In fact, by making a few smart choices now, you can eliminate future financial burdens and alleviate stress. 

Reduce Debt 

Too often, millennials choose to celebrate landing that first job by making a large purchase. Before you rush out to buy a new car, know the difference between “good debt” and “bad debt.” According to Forbes.com, “good debt” is generally debt with a lower interest rate than the rate you could be earning by investing. For example, a home loan would commonly be considered “good debt,” while a car loan or credit card debt are more likely “bad debt.” 

If you already have debt from a credit card, car loan, or student loans, start by paying off the debt with the highest interest rate first. Top Ten Reviews suggests writing out a game plan for how and when you are going to pay off your debts. Pay off as much as possible, as quickly as possible. 

Start Saving 

Now Utilize a budget. Keep your spending under control and allocate a designated amount each month to your savings. A good strategy would be to have three types of savings funds. 

Emergency Fund 

According to U.S. News, in a stretch of hiring slowdowns, it is crucial to have an emergency fund to cover an unexpected period of unemployment.This fund should be enough to cover your living expenses for three to six months. 

Short Term Savings

• Planning on buying that new car after all? Want to take a weekend trip to Vegas? Minimize your debt by planning ahead and saving now. 
• Having a short term savings fund can give you the financial freedom to do the things you enjoy, without breaking the bank. Long Term Savings 
• When you’re in your twenties, “retirement” seems light-years away. However, being in your twenties is the best time to start saving for retirement, because of the power of compound interest. The earlier you start saving, the more interest you’ll earn! 
• If your employer sponsors a 401K plan, make sure you are taking advantage of this opportunity. In addition, consider opening a Roth IRA. The Roth IRA is especially a good option for someone at the early stages of their career, because once you exceed a certain level of income, you can no longer contribute. Essentially, with a Roth IRA, you can pay taxes now and avoid paying taxes on any future earnings from your investment. 
•  Consider a Target-Date Retirement Fund. Not only do these funds typically have low expense ratios, but they eliminate the added work load of trying to manage your portfolio yourself. These funds are fully diversified and managed by investing professionals. As you approach your target retirement date, the fund will automatically become more conservative. 
• It’s important to remember that withdrawing early from a 401K or an IRA will have significant financial penalties. This is why it is important to have your emergency fund and a short term savings fund; do not tap into your long-term savings. 

Put Your Technology to Work 

Today, there are so many resources available to help get your finances under control. For example, Mint.com is a great tool to monitor your budget and track your spending – and the smartphone app is both fun and user-friendly. Another example would be using annualcreditreport.com or Credit Karma to watch your credit score and prevent identity theft. 

Make your life easier by setting up automatic payments. Find out if your employer offers automatic paycheck deductions for your 401K. In addition, most banks allow you to set-up automatic scheduled transfers. Make your finances your first priority by scheduling an automatic transfer into your savings account. Pay yourself first. You can also set up automatic payments to pay off your student loans and pay your monthly bills. Automatic bank drafts ensure that you always pay on time, thus avoiding any unnecessary late charges. 

Reigning in your finances can seem like a daunting task at first, but you can conquer your financial fears by managing your debt, maximizing your savings, and using technology to your advantage. 

Chris is a blogger for his blog The Financial Park. He is also a golf fanatic and loves to be outdoors. You can find him on Twitter @ChrisLindsey23.

Money Management Tips for Seniors

When it comes to senor money management, there are a few important aspects to keep in mind, since older individuals often have to have a different approach to spending and managing money. While some people start saving for their retirement immediately after they start their first job, others wait until they only have a few years left before they start saving for their retirement.

In order to have enough for your retirement you need to calculate your current lifestyle requirements; you need to maintain at least 70% to 80% of your current working income. However, you might outlive your income or you might not have time to save enough to maintain your lifestyle. Retirement experts believe that you should not use more than 5% of your savings every year, should you need it, so that you don’t run into trouble when it comes to retirement time.

Consider Health Care Expenses

Healthcare expenses can make out a huge part of your retirement savings, especially if you have a chronic illness or an unforeseen accident. Ensuring that you have a proper medical aid plan can make this much easier to manage, which is why you need to consider medical coverage early on in your career.

Consider things like Medicare Savings Programs where you can reduce your co-payments and save money in the process. There are four different programs to read about, so you can choose the one that suits you best. Each of these programs has different income limits so you can compare them to see which one will suit you. 

Daily Money Management

Senior citizens can benefit from daily money management (DMM) services as this will allow them to have someone take care of their bookkeeping requirements. This can include writing checks for bills to be paid, keeping records of all payments made and received. This will give the individual, as well as their families, peace of mind, knowing that bills are paid and that money is not wasted on unnecessary purchases.

Money management and retirement savings don’t have to be difficult to manage. You can get help from a licensed financial advisor to guide you throughout this process, which is a great help for many individuals. Always make sure that you verify these individuals, though, to ensure that they have the skills and experience necessary to handle your finances and give you professional, practical advice. 

There are a few other aspects to consider:

• Senior discounts. Many retailers are happy to offer senior discounts on specific days of the week or month.
• Community service. Some senior programs provide payment for services, so you can get paid for giving back.
• Stay at home. If you own a home, it’s a huge asset. Stay there and save money on old age homes where possible. 

Saving for your retirement is just as important as properly managing your finances when you are retired. With a few tips and clever choices you can make sure that you live a comfortable life after retirement. It’s a good idea to work with a financial planner if you are still in the early stages of saving for retirement, making it easier to make the right decisions and know how much money to save.

License Direct provides a centralized license search for more than 20 million registered professionals across the United States.

3 Smart Investments

One of the major contributing factors to the economic crisis of 2008 was the lack of personal savings. Easy credit was a way of life through the early 2000's up until the crash, and consumers used that credit to fuel consumption. When the market tanked, wages dropped and jobs were cut, leading to a nasty decline in consumer purchases. Many of the newly-unemployed had no savings upon which to draw in order to maintain their level of spending. For those with adequate savings, however, the situation was much less dire. While you cannot prevent a widespread economic disaster, you can organize a plan to be prepared no matter the situation.

Traditional IRA or Roth IRA

An Individual Retirement Account (IRA) is a legal construct of the Internal Revenue Code that allows investors to shield their savings from taxes. There are two forms of the IRA. The first form is a Traditional IRA, which allows savers to fund their retirement account with pre-tax dollars. Essentially, if you put money into a Traditional IRA, you can deduct that amount from your taxes. You can continue making annual contributions to your account and you won’t pay taxes on it until you start withdrawing from the account in retirement. The second type of IRA is the Roth IRA, which takes contributions of after-tax dollars. This means that when you withdraw from your Roth IRA in retirement, you will not pay any taxes on it. Also, the Roth IRA has more flexible rules for pre-retirement withdrawals from the principal. One of the great things about both types of IRA's is that you can put whatever investments you want in the accounts: stocks, bonds, real estate, baseball cards, etc.

Index Funds

Many investors think that stocks are the best way to make money over time. While that can be true, this strategy only works if you pick the correct stocks; if you pick the wrong stocks, you can lose your entire portfolio overnight. Unfortunately, many experts believe that it is impossible to reliably pick the correct stocks over time. Even if you do pick the right stocks, you have to buy them and sell them at the right time. One commonly-used strategy is to invest in mutual funds, which are managed by professionals who charge a fee and take a cut of the earnings. The problem is that most mutual funds do not consistently beat the market. Even those funds that do outperform the market will eat away at your gains with their fees. A good alternative is to invest in an index fund. An index fund is a fund that consists of stocks from a stock index, such as the Dow Jones Industrial Average and Standard & Poor's 500. These funds are meant to track the economy as a whole, which consistently outperforms most mutual funds. Even better, index funds have much lower fees than a typical mutual fund, preventing the erosion of your investment.

401(k) Matching

One very common financial mistake happens when employees who are eligible for 401(k) matching by their employers do not contribute up to the full match. For example, imagine a 401(k) match of 50% of employee contribution on up to 6% of the employee’s salary. This means that your employer will put fifty cents in your 401(k) for every dollar you put in on up to 6% of your salary. If you make $100,000 per year, 6% of your salary is $6,000 and your employer will contribute up to half of that, which comes out to $3,000. If you do not contribute at least $6,000, you are literally turning down free money from your employer!

Investments can be confusing and dangerous. A few wrong moves and you can delay or even eliminate your retirement. There are no guarantees in life, and even fewer in investing. However, if you invest in IRA's, index funds and 401(k) matching, you are definitely giving yourself a major advantage.

Ken Myers is a father, husband, and entrepreneur. He has combined his passion for helping families find in-home care with his experience to build a business. Learn more about him by visiting @KenneyMyers on Twitter.

What Type of Retirement Account is Right for Me?

When starting their careers after school, new members of the “real world” are likely given some options to invest their money. This can be multiple different avenues, and many of them can help prepare for the future. If retirement is on a person's mind, they may want to look at a couple of choices to help strengthen their financial strategy.

We at World Financial Group know that individuals need to think about retirement starting at an early age. This can be a tricky process, but there are many options available to help people achieve their goals. Starting early is important, and it can prevent delays in a person's fiscal plan later on.

Planning for retirement necessary from the get-go

Everyone wants to retire comfortably, but there may be some issues on how a person will accomplish those goals. By setting a strict plan from the time a person is getting into the working world, it can improve the chances of retiring on time.

• Start saving now – There is never a point where it is too early to start putting money away for retirement, and delaying this process can hurt the chances of getting it done. 
• Know what is needed – Having set goals are only as good as the likelihood an individual can reach them. Saving a set amount and working to increase that level gradually may put the person in a better spot later on. 

Not all retirement accounts made equal

Young people need to look at a variety of retirement options, and considering these choices should be a long process. When finding the right type of plan, a person can adjust their strategy to ensure they are in the best position to save a sizable amount of money.

• Roth IRA – One of the best aspects of having a Roth IRA is that all withdrawals of the account are without any tax penalty. There are still some tax contributions, but the money taken out belongs to the person who owns the policy. This policy also allows for withdrawals before a person retires without a penalty, which can be beneficial if the account holder needs the money. 
• 401(k) – This policy allows for an individual to work with their employer in order to build their retirement savings. If account holders put a certain amount of their paychecks toward this account, they may be able to get their employers to match their contributions – thus providing a nice boost to their savings. 

These available options can help a person get the tools they need to retire successfully. However, these may be even better if a person combines them with other diversified savings plans such as a nest egg account and a college fun for any children they may have.

The Necessity of Individual Retirement Accounts

retirement (Photo credit: 401(K) 2013)

Even if you have quite a long time before you retire, it's never too early to start thinking about a plan. When that day comes, you want to make sure you have enough money saved up and that you are able to live comfortably. What are the benefits if individual retirement accounts, which are sometimes referred to as IRAs?

An Individual Plan

Not everyone has the same needs, and you want to ensure that your personal ones are met. By developing an IRA, you can work to craft a plan that makes sense for you and addresses your personal and financial needs. When you take the time to sit down with a certified financial planner and come up with an individual retirement account, you are being smart about your future. Specifically, you will be able to work toward attaining a specific amount of money to have reserved for you when you retire. In society at large, these accounts allow people to develop a greater sense of personal responsibility.

Personal Responsibility

Let's explore this concept of personal responsibility a little bit more. It is clear from the state of the economy that many people and government entities are not great with money. Therefore, it's also smart to take some steps to amplify your knowledge and to learn more about where your money goes and why it's important. Taking the step to have an IRA, regardless of the specific type, means that you are putting personal stake into your financial affairs and working toward a plan that works for you.

Tax Options

You likely want to know about taxes on these accounts, and CNN Money's article, "Retirement: IRA Investment Advantages" discusses them in detail. The article writes, "There are two types: a traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals in retirement, and, if you qualify, your contributions may be deductible...A Roth IRA, by contrast, doesn't allow for deductible contributions but offers tax-free growth, meaning you owe no tax when you make withdrawals in retirement." You don't need to be told that both of these situations are rather desirable.

Withdrawing Money

The end of the article notes, "Further, if you need the money before retirement, there are more opportunities for penalty-free withdrawals." Ultimately, the goal here is to save up as much money as possible before retirement so that you do not have to deal with financial burdens later in life. However, sometimes situations do arise, and you just need to have the cash available now. When that happens, you can turn to your IRA and take out some of the money to help get you through. Since it's your personal account, you do have the freedom to do that.

Working toward an IRA is really a smart idea. Whether you have just entered into the workforce or you are thinking about retiring soon, it's smart to start making a plan that can be really beneficial to you and your financial situation.

Author Jason Harter is a retired accountant who can happily say that he has all of his retirement accounts in proper order. He obtained his Online Bachelor's in Accounting Degree.

Roth IRA vs. 529 plan - Which is Better for College Savings?

Roth IRA (Photo credit: Philip Taylor PT)

In USA Today they had a story that compared Roth IRAs to 529 Plans.  It said when it comes to saving for a child’s college education, a Roth IRA might be a better investment than a 529 Plan. I agree the column is right in suggesting that anybody who is thinking about saving for a child’s college expenses should consider a Roth IRA instead of, or in addition to, a 529 Plan.

The 529 Plan

A 529 Plan allows contributions to grow tax-free and distributions to be made without any taxes or penalty, if the distributions are for qualifying educational expenses.  So if you take $5,000 today, put it away in a 529 Plan for your child’s college, and it grows to $10,000 in 10 years, you can use that $10,000 for college and not owe any tax on your $5,000 in growth. But what if you need the money, or your kid decides not to go to college?  Well if you end up taking a withdrawal from the 529 Plan for something other than qualifying educational expenses, the earnings become taxable, and there’s a 10% penalty assessed on the earnings portion of a withdrawal.  

Benefits of the Roth IRA

Roth IRAs are designed for retirement savings, but are flexible because of the withdrawal rules.  At any time after the Roth IRA is established, an individual can withdraw contributions that were made to the Roth IRA for any reason without any penalty.  If an individual has had a Roth IRA for at least five years, contributions and earnings can be withdrawn without any penalty and without any taxes if the distribution is a qualified distribution (examples of qualified distributions include distributions after the individual has reached age 59 1/2, or a withdrawal to help the Roth IRA owner or a qualifying family member buy a first home for the individual or a family member).

Where they Differ

Distributions from a Roth IRA to pay for qualifying educational expenses aren’t treated quite the same as qualifying distributions, since the earnings portion of the distribution is subject to tax. This is a key difference between the Roth IRA and the 529 Plan, where earnings distributed for qualified educational expenses aren’t subject to income tax.

Which is Best?

Roth IRAs easily have 529 Plans beat if you want flexibility. 529 Plans are state-sponsored programs and come with limited investment options which typically include mutual funds, CDs, and bonds.  With Roth IRAs, investors can actively manage the account and have a much broader array of investment options.

In addition to earnings being subject to income tax when distributed for educational purposes, Roth IRAs have a few other shortcomings as compared to 529 Plans.  529 Plans allow for significantly greater annual contributions. Roth contributions are capped at $5,000 for individuals under 50, or $6,000 for individuals 50 and over. 

If you are considering setting up or continuing to fund a 529 Plan for a child, you should consider contacting a financial planner to discuss whether a Roth IRA might be a better option for you.  Not only can a financial planner help you determine whether a Roth IRA is appropriate, but he or she can also help you navigate the rules regarding contributions and withdrawals.

Prosper.com Now Offering IRAs and Other Tax Deferred Accounts

Prosper.com is the website that believes in the power of peer-to-peer lending, cutting out the middleman. Prosper.com puts together creditworthy borrowers who want to borrow money with lenders seeking consistent and predictable high-yield returns. At Prosper.com you can expect seasoned returns of up to 10.46%. Borrowers can apply for unsecured loans at rates starting at 6.59%.

With 1,250,000 members and over $311,000,000 in personal loans funded, Prosper.com has attracted much attention. The loan process and forms are all done online. Easy and quick for the borrower. The lenders see a high rate of return and the advantage of diversifying over several loans. There is relatively low risk associated with a peer to peer loan because lenders invest a small amount (as low as $25) in many different loans, there’s always some risk but you get to spread it around many loans.

Now, to make investing even sweeter at Prosper.com they are offering Traditional, Roth, SEP and 401(k) rollovers in a Prosper IRA. The minimum investment requirement is $5,000. The federal deadline to fund a Prosper.com IRA is Tuesday, April 17, 2012.

Benefits of a Prosper IRA are:

• Tax advantages: returns grow faster tax-deferred with the Traditional IRA, and tax-free with a Roth IRA.
• No fees: all fees for accounts with balances of at least $10,000 are paid by Prosper.com.
• Broad diversification: a portfolio of consumer loans helps reduce an investor's portfolio volatility.
• Easy reinvestment: Prosper.com’s Automated Quick Invest tool reinvests earnings so that returns compound over time.
• Personalized service: To ensure the best service, Prosper.com has partnered with Sterling Trust3, the self-directed IRA custodian with over $10 billion under custodial and retirement administration.

For more information, Prosper.com is hosting a free webinar on Thursday, March 15 at 7 p.m. ET / 4 p.m. PT. Prosper.com’s Chief Investment Officer, Joseph Toms, and Mike Kurka, Institutional Sales Executive at Sterling Trust will lead the conversation: “Boost Your Retirement Savings: The Advantages of a Self-Directed IRA for Your Peer-to-Peer Lending Investment.” Register here.

Personal loans at rates as low as 6.59% APR. No hidden fees. No pre-payment penalties

Can Your Kids Have Roth IRAs?

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With the past summer and the holiday season coming up many kids our working and earning money. Is it possible for them to put their money in Roth IRAs? 
 
The only requirement to have a Roth IRA is earned income for the year. Age doesn't enter into it. So if your kid earns money, they are entitled to make a Roth IRA contribution. For the year 2010 the rule is the contribution can be the total amount of income or up to $5000. This contribution amount is for a Roth or traditional IRA. 
 
Is the Roth IRA better than the traditional IRA? 
 
One way it is better than a traditional IRA is that you can withdraw all or part of it without any income tax or penalty to pay for college or any other reason. But rule is you cannot withdraw the earnings tax free till age 59 1/2. 
 
Even though contributions can be withdrawn anytime without tax or penalty consequences it's best to leave it in the account to grow tax free till retirement. If it's in a traditional IRA, all distributions will be taxed and there is a 10% penalty, unless their money is used for college costs. 
 
What about tax deductions? 
 
If your contributing to a Roth IRA there are no tax deductions. If your contributing to a traditional IRA the tax deductions are negligible to none. It would make sense only if your child makes a significant amount of money. 
 
Teaching our children to save is one of the greatest gifts we can give them. Also instructing them to invest in a Roth IRA is a great way to teach them to save. And with the tax advantage it's even better. Your is never to young to learn about the ways to save and minimize taxes or avoid them. 

Can You Start At 50+? Part 2

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Such great plans and goals have been made. Do you think I can really pull it off? A lot of debt has to be paid off. Lets see whats before me.

• Credit Card 1- Finished by October 1,2010
• Credit Card 2- Finished by October 1,2011
• Credit Card 3- Finished by October 1,2014 (realistically)

It doesn't look good for the old retirement account. This is a real problem. Starting in 4 years worries me. When seeing it in black and white it speaks volumes. But what choice do I have? I have a plan and I'm sticking to it. But maybe I should just pay the minimums on the cards and put the extra debt payments in my Roth IRA. I'm doing the debt snowball process for paying off debt. I'm putting all money towards the smallest debt and only the minimums to the others. When that's payed off then throwing all moneys toward the next one and so on. To reduce this time frame an increase in income is needed or a decrease in expenses. I'll be trying on both those fronts. So to answer my own question. Yes. But I wish I would of done this 30 years ago. It going to be a real pain in the ass.

GOALS, GOALS, GOALS

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Through all my life i have been told that to accomplish something in life you must have a plan. Mom and Dad would constantly say "Go to school, study hard, go to college and get a good job." Was I the only one to here this? I know this was my first plan given to me by my parents. If I followed it I would become successful. It didn't work to well, life got in the way.

I had some of my own goals in my life that I set up. For instance "Try to finish college, get some kind of job and try to pay your bills." That plan was the one I did accomplish. Who said, "When you aim at nothing you'll hit it every time."?

Well that's not going to happen anymore. I am setting goals here and now for the world to see. In time we will see what I accomplish. Now what are these goals?

1. Have $1000 saved in the bank for emergency's.
2. Get on a budget.
3. Spend less than I make
4. Pay off all debts but the mortgage.
5. Have 3 to 6 months expenses in savings.
6. Save for college for my 10 year old daughter.
7. Save 15% of my income to a Roth Ira for retirement.
8. Pay off Mortgage.

There are my goals. I have the first 2 completed. I am struggling to do the third goal. Maybe I'll get better with time. The fourth goal is what I'm concentrating on now. Are these lofty goals? I don't think so. I do think that if I don't do them I will be reading the book "50 Ways to Cook Alpo" in my retirement.

I must admit I am stealing this list from Dave Ramsey's "7 Baby Steps". He is real good with these things, check him out. I did edit it for my life but "Baby Steps" are great.