So you're looking for some retirement planning and employee benefit tips? First of all, keep in mind that employee benefits should be one of the biggest things you look at when choosing which company to work for. Quite simply, there are few things in your life more important than your retirement planning, because you will be living without any income coming in, or at least a much reduced one.
Of course, with people living longer and longer today, this leaves about 30 to 40 years you will need to support yourself with a much lower income than you were getting by with earlier. This makes retirement planning essential to live the kind of lifestyle you’ve always wanted to live when you retire.
Most people never take the time to plan out their retirement, and find themselves in a financial crisis when they are ready to stop work. As a result, many, many people end up working long beyond the time they wanted to retire at. Don’t let this happen to you; by doing some simple planning, you can easily avoid this outcome and have all the money you need to retire on, and then some.
Of course, don't be bashful in this retirement planning and employee benefit process; your retirement years should be one of the most awesome times in your life, because you'll have time to do things you weren't able to do what you are working. Therefore, think of anything you want to do during this time, and write it out. This will serve as your guide in your retirement planning process.
So what you look for when choosing the right company for you and finding the right retirement planning and employee benefit package? As I said before, your employee benefit package should be one of the biggest things you look for. First of all, do they have an IRA?
This should be one of the biggest things to look for. An IRA, otherwise known as a pension fund, is one of the best ways to plan for your retirement, because it allows you to contribute money from your own salary and your employer will match it often times.
This way you are receiving more money into your retirement account than simply a portion of your salary. When looking for an IRA, try to find a company that offers a self-directed IRA
The main reason you want a self-directed IRAs because it will allow you to choose which investment you want for your IRA for your own situation. Relying on other people such as your company to do this for you could be financial suicide. Quite simply, most people simply throw their money away to a fund manager or their company, and allow them to do what’s best for them in their retirement planning process.
Unfortunately, using these methods will not make you rich. The only way to make yourself wealthy is to become financially educated and learn to pick up on investing and spot your own investment opportunities. Follow these retirement planning and employee benefit tips and you'll be able to find the right company for you and live the retirement lifestyle you've always wanted to.
About the Author
For retirement planning investment and retirement planning calculators info, visit online retirement-planning.com
Friday, October 31, 2008
Tuesday, October 28, 2008
Saving For Retirement: Compound And Grow Your Employer Matching Retirement Plan
If your employer offers a matching contribution to your retirement plan, the cardinal rule is: contribute whatever the employer is willing to match—even if it is only a percentage of your contribution and not a dollar for dollar match.
Imagine depositing $1,000 of your money into the bank, but instead of getting a crummy toaster, you receive an extra $1,000 to go along with your deposit. To add to the fun, imagine getting a tax deduction for your deposit and not having to pay tax on your “gift.” Furthermore, both your $1,000 and the gift $1,000 grow (it is to be hoped), and you don’t have to pay income tax on the interest, dividends, capital gains, or the appreciation until you withdraw the money.
When you withdraw the money, you will have to pay taxes, but you will have gained interest, dividends, and appreciation in the meantime. That is what employer matching contributions to retirement plans are all about. If the employer matches the employee contribution, it offers a 100% return on the investment in one day (assuming no early withdrawal penalties apply and the matched funds are fully vested).
Over the years, I have heard hundreds of excuses for not taking advantage of an employer-matching plan. All those reasons can be summarized in two words: ignorance and neglect. If you didn’t know that before, you know now. If you are not currently taking advantage of your employer-matching plan, run—don’t walk—to your plan administrator and begin the paperwork to take advantage of the employer match.
Matching contributions are most commonly found within Section 401k, 403b, and 457 plans. Even if your employer is only willing to make a partial match up to a cap, you should still take advantage of this opportunity. A fairly common agreement is that the employer will contribute 50 cents for every dollar up to the first 6 percent of salary you contribute. Don’t grouse that it is not enough or not worth it. You have everything to gain—this is free money that will compound and grow—and as Einstein said, “The most powerful force in the universe is compound interest.”
About the Author
Top IRA expert, James Lange, has developed tax-savvy retirement & estate plans for many with appreciable assets in their IRAs & 401(k) plans. In his book, Retire Secure! Jim proves you can be tens of thousands to over a million dollars richer by "paying taxes later" & using Roth IRAs. Get the book now & learn how: http://www.retiresecure.com/
Imagine depositing $1,000 of your money into the bank, but instead of getting a crummy toaster, you receive an extra $1,000 to go along with your deposit. To add to the fun, imagine getting a tax deduction for your deposit and not having to pay tax on your “gift.” Furthermore, both your $1,000 and the gift $1,000 grow (it is to be hoped), and you don’t have to pay income tax on the interest, dividends, capital gains, or the appreciation until you withdraw the money.
When you withdraw the money, you will have to pay taxes, but you will have gained interest, dividends, and appreciation in the meantime. That is what employer matching contributions to retirement plans are all about. If the employer matches the employee contribution, it offers a 100% return on the investment in one day (assuming no early withdrawal penalties apply and the matched funds are fully vested).
Over the years, I have heard hundreds of excuses for not taking advantage of an employer-matching plan. All those reasons can be summarized in two words: ignorance and neglect. If you didn’t know that before, you know now. If you are not currently taking advantage of your employer-matching plan, run—don’t walk—to your plan administrator and begin the paperwork to take advantage of the employer match.
Matching contributions are most commonly found within Section 401k, 403b, and 457 plans. Even if your employer is only willing to make a partial match up to a cap, you should still take advantage of this opportunity. A fairly common agreement is that the employer will contribute 50 cents for every dollar up to the first 6 percent of salary you contribute. Don’t grouse that it is not enough or not worth it. You have everything to gain—this is free money that will compound and grow—and as Einstein said, “The most powerful force in the universe is compound interest.”
About the Author
Top IRA expert, James Lange, has developed tax-savvy retirement & estate plans for many with appreciable assets in their IRAs & 401(k) plans. In his book, Retire Secure! Jim proves you can be tens of thousands to over a million dollars richer by "paying taxes later" & using Roth IRAs. Get the book now & learn how: http://www.retiresecure.com/
Saturday, October 25, 2008
Saving For Retirement: Make The Maximum Contribution To Your Retirement Plan & Retire Secure
Many people—perhaps you—feel they cannot afford to save for retirement. The truth is you may very well be able to afford to save, but you don’t realize it. That’s right. I am going to present a rationale to persuade you to contribute more than you think you can afford.
First, I am operating on assumption that you are following the cardinal rule of saving for retirement: If your employer offers a matching contribution to your retirement plan you are contributing whatever your employer is willing to match—even if it is only a percentage of your contribution and not a dollar for dollar match.Now, let’s assume you have been contributing only the portion that your employer is willing to match and yet you barely have enough money to get by week to week. Does it still make sense to make non-matched contributions or Roth IRA contributions assuming you do not want to reduce your spending? Maybe.
(This article does not address Roth IRA contributions vs. non-matched 401(k) contributions and hereafter only refers to non-matched 401(k) contributions). If you have substantial savings and maximizing your retirement plan contributions causes your net payroll check to be insufficient to meet your expenses, you should maximize retirement plan contributions. The shortfall for your living expenses from making increased pre-tax retirement plan contributions should be withdrawn from your savings (money that has already been taxed). Over time this process, i.e., increasing contributions to your retirement plan and funding the shortfall by making after-tax withdrawals from an after-tax account, transfers money from the after-tax environment to the pre-tax environment. Ultimately it results in more money for you and your heirs. Another way to squeeze blood from a stone is to consider an interest only mortgage. The reduced mortgage payment (in contrast to what you would be paying on a 30-year fixed rate mortgage) is deductible as a home interest expense.
The additional cash flow from the reduced payment could be used to pay credit card debt or fund one or more tax favored investments. You could open a Roth IRA, make additional retirement contributions, and/or purchase a tax-favored life insurance plan. In the long run, you could be better off, often by hundreds of thousands of dollars. Of course there are risks with this strategy.Another opportunity to shift savings from the after-tax environment to tax advantaged retirement savings might arise if you are the beneficiary of an inheritance.
Take this “Changing Your IRA and Retirement Plan Strategy after a Windfall or an Inheritance” mini case study for example:Joe always had trouble making ends meet. He did, however, know enough to always contribute to his retirement plan the amount his employer was willing to match. Because he was barely making ends meet and had no savings in the after-tax environment, he never made a non-matching retirement plan contribution. Tragedy then struck Joe’s family. Joe’s mother died, leaving Joe with $100,000. Should Joe change his retirement plan strategy? Yes. If his housing situation is reasonable, he should not use the inherited money for a house—or even a down payment on a house. Many planners and people will disagree. Of course it depends on individual circumstances. Instead, Joe should increase his retirement plan contribution to the maximum.
In addition, he should start making Roth IRA contributions. Many of you who live in areas that have seen huge real estate appreciation think he should use the money to invest in real estate. You may have been right yesterday. You might even be right today. It is, however, a risky strategy, unsuitable for many if not most investors. Assuming he maintains his pre-inheritance lifestyle, between his Roth IRA contribution and the increase in his retirement plan contribution, Joe will not have enough to make ends meet without eating into his inheritance.
That’s okay.
He should then cover the shortfall by making withdrawals from the inherited money. True, if that pattern continues long enough, Joe will eventually deplete his inheritance in its current form. But his retirement plan and Roth IRA will be so much better financed that in the long run, the tax-deferred and tax-free growth of these accounts will make Joe better off by thousands, possibly hundreds of thousands, of dollars. The only time this strategy would not make sense is if Joe needed the liquidity of the inherited money, or he preferred to use the inherited funds to improve his housing.Now, do you think you can afford to make the maximum contribution to your retirement plan? The truth of the matter is you cannot afford to ignore my advice and not make the maximum contribution to your retirement plan.
About the Author
As one of the country’s top IRA experts and author of Retire Secure!, James Lange, can keep you from jeopardizing your family’s security. He has developed tax-savvy retirement and estate plans for over 800 U.S. citizens with appreciable assets in their IRAs and 401(k) plans. Your family’s future depends on you signing up now for his monthly Retire Secure newsletter at http://www.paytaxeslater.com
First, I am operating on assumption that you are following the cardinal rule of saving for retirement: If your employer offers a matching contribution to your retirement plan you are contributing whatever your employer is willing to match—even if it is only a percentage of your contribution and not a dollar for dollar match.Now, let’s assume you have been contributing only the portion that your employer is willing to match and yet you barely have enough money to get by week to week. Does it still make sense to make non-matched contributions or Roth IRA contributions assuming you do not want to reduce your spending? Maybe.
(This article does not address Roth IRA contributions vs. non-matched 401(k) contributions and hereafter only refers to non-matched 401(k) contributions). If you have substantial savings and maximizing your retirement plan contributions causes your net payroll check to be insufficient to meet your expenses, you should maximize retirement plan contributions. The shortfall for your living expenses from making increased pre-tax retirement plan contributions should be withdrawn from your savings (money that has already been taxed). Over time this process, i.e., increasing contributions to your retirement plan and funding the shortfall by making after-tax withdrawals from an after-tax account, transfers money from the after-tax environment to the pre-tax environment. Ultimately it results in more money for you and your heirs. Another way to squeeze blood from a stone is to consider an interest only mortgage. The reduced mortgage payment (in contrast to what you would be paying on a 30-year fixed rate mortgage) is deductible as a home interest expense.
The additional cash flow from the reduced payment could be used to pay credit card debt or fund one or more tax favored investments. You could open a Roth IRA, make additional retirement contributions, and/or purchase a tax-favored life insurance plan. In the long run, you could be better off, often by hundreds of thousands of dollars. Of course there are risks with this strategy.Another opportunity to shift savings from the after-tax environment to tax advantaged retirement savings might arise if you are the beneficiary of an inheritance.
Take this “Changing Your IRA and Retirement Plan Strategy after a Windfall or an Inheritance” mini case study for example:Joe always had trouble making ends meet. He did, however, know enough to always contribute to his retirement plan the amount his employer was willing to match. Because he was barely making ends meet and had no savings in the after-tax environment, he never made a non-matching retirement plan contribution. Tragedy then struck Joe’s family. Joe’s mother died, leaving Joe with $100,000. Should Joe change his retirement plan strategy? Yes. If his housing situation is reasonable, he should not use the inherited money for a house—or even a down payment on a house. Many planners and people will disagree. Of course it depends on individual circumstances. Instead, Joe should increase his retirement plan contribution to the maximum.
In addition, he should start making Roth IRA contributions. Many of you who live in areas that have seen huge real estate appreciation think he should use the money to invest in real estate. You may have been right yesterday. You might even be right today. It is, however, a risky strategy, unsuitable for many if not most investors. Assuming he maintains his pre-inheritance lifestyle, between his Roth IRA contribution and the increase in his retirement plan contribution, Joe will not have enough to make ends meet without eating into his inheritance.
That’s okay.
He should then cover the shortfall by making withdrawals from the inherited money. True, if that pattern continues long enough, Joe will eventually deplete his inheritance in its current form. But his retirement plan and Roth IRA will be so much better financed that in the long run, the tax-deferred and tax-free growth of these accounts will make Joe better off by thousands, possibly hundreds of thousands, of dollars. The only time this strategy would not make sense is if Joe needed the liquidity of the inherited money, or he preferred to use the inherited funds to improve his housing.Now, do you think you can afford to make the maximum contribution to your retirement plan? The truth of the matter is you cannot afford to ignore my advice and not make the maximum contribution to your retirement plan.
About the Author
As one of the country’s top IRA experts and author of Retire Secure!, James Lange, can keep you from jeopardizing your family’s security. He has developed tax-savvy retirement and estate plans for over 800 U.S. citizens with appreciable assets in their IRAs and 401(k) plans. Your family’s future depends on you signing up now for his monthly Retire Secure newsletter at http://www.paytaxeslater.com
Subscribe to:
Comments (Atom)
Posts
