IRAMisconceptions
Ask yourself how much money you want saved for retirement. The answer is usually “enough to live comfortably.” When planning out retirement far in advance, inflation also becomes a factor to consider. It’s not uncommon for inflation, not to mention taxes, to negatively impact your principal and lower your real rate of return. Myth: If you already have a retirement plan 4 Common Questions Answered
There are a number of misconceptions about IRAs (individual retirement accounts) still out there. These misconceptions can lead to people avoiding IRAs or similar types of retirement accounts. Let’s take a look at a few of those misconceptions and clear the air. Myth: If you’re taking Social Security benefits,
or you plan on using themwhen you’re retired, you don’t need an IRA. Relying on Social Security alone is often a mistake. Unless you expect to change your lifestyle, you can expect a significant drop in income. On average, Social Security pays roughly 40 percent of retirees’ preretirement income, a number which is dropping. For many this change can represent a large financial burden, one that is unsustainable unless you have other savings and investments available to supplement Social Security.
through your employer, it's neither practical nor possible to open an independent IRA. It is both practical and possible to open an IRA alongside a pension plan or 401(k). It’s never a bad idea to have more than one retirement plan in place. If
you do have a 401(k), keep in mind that if you open a traditional IRA, the 401(k) may affect your ability to take a tax deduction on traditional IRA contributions. Myth: If you’re younger and have limited work experience and income, it’s not possible to open an IRA. Anyone making an earned income, regardless of age, can open a new IRA. If you’re older, you can continue to contribute to a Roth IRA, provided you have the earned income to do so.
Myth: If you have an IRACD, you’ll have a secure retirement. Possibly, but understand that, because CDs are reliable and secure, the rate of return is lower than a riskier investment, such as a mutual fund.
3 STEPS TORETIREMENT The Road Map Every 55-Year-Old Should Follow
KnowYour Portfolio. The stock market is a tempting gamble for those looking to jump-start their nest eggs. However, investments with the highest returns also come with significant risk. The last thing anyone wants is to end up losing their principal right before retirement. That’s why most financial planners recommend investment strategies that growmore conservative as you age. If you are thinking about investing—or have been doing so for some time— it’s a good idea to check in regularly with your portfolio and ensure that you are comfortable with the amount of risk you are incurring. Settle Your Debts. Debts, especially ones with high interest rates, can chew through your retirement savings. If you can’t get it all paid off before retirement, consider moving your credit card debt and other loan balances to accounts with a lower rate to ensure you are paying as little in interest as possible. These tips provide a general road map to a more stable retirement. Your own goals and financial situationmay provide unique challenges and opportunities on the path to your post-work life. To understand your best options, reach out to a trusted financial advisor.
If you’re age 55 or older, it’s time to get serious about planning for your retirement. In fact, most industry experts recommend far longer lead times of 20 years or more! But don’t be discouraged! Even if
you’re a late planner, there are steps you can take to ensure you get the most out of your retirement. Here are the three most important steps you need to take to secure your future. Get Your Finances in Order. The first place to start when preparing for retirement is your own checkbook. By gauging your overall financial readiness, you can identify whether your spending and lifestyle habits are in need of a course correction. You’ll need to consider all of your finances as well as your income tax rate, the rate of return on your savings, and any benefit plans you may have from your employer. If your financial readiness falls short of the income you expect to live off of in your retirement, it’s time to make some adjustments. Cutting back on day-to-day expenses, working a second job, and increasing your contributions to salary deferral programs are all great ways of boosting your readiness ahead of retirement.
2 • CampbellWealth.com
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