Retirement Planning

Since the demise of the traditional workplace pension offering lifetime income for years of service, Americans are largely on their own planning for retirement. Social Security benefits still exist but the future is uncertain. And people are living longer than ever before. (Long life + little savings is a recipe for disaster.) Here is my quick take on Retirement Planning basics.

My recommendation for everyone:

  1. Contribute to your employer’s retirement plan up to the company’s matching limit. The company’s contribution to your account is free money. Don’t ignore the gift. (Tax deduction now, fully taxable later.) 
  2. Max out a Roth IRA every single year without fail, no matter your age. (After tax dollars, never taxed after age 59 ½)

If you’ve done those two, then consider these options: 

Annuities:

An annuity is a contract enabling you to accumulate and distribute money. An annuity can be “qualified” (pre-tax dollars, annual limits on contributions) or non-qualified (after tax dollars, unlimited contributions). One huge advantage an annuity has over many other retirement saving vehicles is you can opt for a guaranteed lifetime income payout. That banishes the fear of outliving your money. However, like buying a car, there are many “models” to choose from and ways to customize a policy. That’s where the services of a professional (like me!) come in handy.

Life Insurance Retirement Plan (LIRP)

All life insurance policies have IRS-sanctioned tax benefits. Some types of permanent policies can be set up to maximize on those in a way that generates tax-free income via no-interest loans. That’s called a Life Insurance Retirement Plan (LIRP). These are not for everyone. It takes a bit of money to fund one and are better if started by mid-life. And, very important, if not set up properly, these can become a tax and financial disaster. Professional assistance from an honest expert (like me) is essential.

Invest in the Stock Market

Investing in the stock market is a valid way to save for retirement. It poses serious risk to both initial investment and gains so should be approached with appropriate caution. Even though I am well versed in investment strategies, I’ve chosen not to become licensed as a stock broker. That means I am not legally allowed to offer you advise on this topic. But I can refer you to investment professionals I trust.

More on Workplace Retirement Plans

Should you contribute more to your 401(k) than your company matches? That’s too complicated a question to give a quick answer here. Income, taxation and loads of other factors must be considered. If you are a teacher, minister, nurse, company owner, or self-employed, there are additional options. To many too detail here. 

So, that is my quick take on saving for your retirement. It’s generic but you need something specifically designed for you. Call or email to arrange a telephone consultation. I’d be happy to help. For a treasure trove of consumer-education articles about Retirement Planning, Pensions, and Annuities, visit this page.