Getting ready for retirement is an important part of life. We do not live in a society where it is possible to just stop working when we get older and have everything taken care of. In fact, most of the time we either need to figure out a way to save up for retirement ahead of time or we will have to continue working until the day we die. And since most people are not interested in wasting their golden years working behind a desk or as a cashier, it is much easier to start planning ahead of time and work on that savings plan as soon as possible.
There are many different retirement plans that you can choose to go with. Each of them have their own benefits and negatives and picking out the one that works the best for you will make a huge difference. If you are interested in setting up a retirement plan and want to make sure you are doing it right, make sure to contact the professionals at James Wells EA MBA Tax Office. They will be able to talk over your retirement, as well as any and all tax implications, so you can provide for your future without having to worry at the last minute.
Picking a Retirement Plan
The first thing that you will need to do is pick out a retirement plan that is going to work the best for you. The two most popular options are the traditional IRA and the Roth IRA. The traditional IRA is the one that most employers will choose to help out with and you could double your contribution without having to spend extra money. Plus this option allows you to deduct any contributions from your taxes in the year that you contributed, which is a nice little addition to your tax refund each year. This is a popular option because you can get the matching contributions without any extra money and you get a nice little check at the end of the year depending on your tax filing status.
If you are thinking a bit more long term though, the Roth IRA may be the right choice for you. While you will not be able to get a matching amount from your employer and there will not be a tax deduction taken into account at this time, you can really save money on the long term. The Roth IRA is tax free when you tax out the deductions. This means that no matter how your tax filing status changes or the tax rate changes in the future, you are still just going to pay the amount that taxes are right now on the money. For most people this is a good thing since they will lose some of their deductions in the future and the tax rate is sure to change.
When picking out a retirement plan, make sure to have the professionals there with you. The professionals at James Wells EA MBA Tax Office are here to help you through every step of the process. Whether you need help figuring out the numbers on what you need for retirement or you are interested in signing up for the right retirement, our professionals are here to make the process as manageable as possible so you can have a secure financial future.
Save a Little or a Lot
The nice thing about starting early is that you can pick how much you are able to afford to pay into the account. While it is always best to put back as much as you can (it never hurts to have more retirement money than you need), any little bit can make a difference when you are starting with 20 or more years to spare rather than with just ten or less. Even if you just make a small contribution each month, you will see it grow.
Let’s look at an example. For a Roth IRA without any contributions, if you are able to put just $120 a month, the cost of spending $4 a day on coffee, you could save an addition $300,000 total for your retirement when starting at the age of 25 rather than at the age of 45. This is with no increase in payments over that time and just 8 percent on the return. Think of what you could do with a higher return, starting a bit earlier, getting an employer to help out, or even putting just twice that away each month. If you would like to see how different numbers will factor into your retirement plan and how much you can save depending on when you will start, make sure to contact the professionals at James Wells EA MBA Tax Office to get started.
Planning for retirement is an important aspect of your life. Whether you are able to save back a little bit or a lot, you need to make sure that you are planning all this out ahead of time. If you are trying to figure out the best retirement plan for your needs and want to make sure you are prepared, contact Jim Wells with James Wells EA MBA Tax Office in Santa Cruz, CA to help. Our professionals are well-versed in all tax topics and are ready to get you set up on the right path to a great retirement. Contact us today to get started.
James Wells EA MBA Tax Office