How To Save Pictures From Iphone 4

Saving for Retirement

CC0/Nosheep/Pixabay

Retirement should be a time to enjoy life. You should be able to relax and not worry about money anymore. To do that you need to think about your pension at every stage of your career. When you retire you want both time and money to be on your side so how do you make the most of your pension? You have three main ways of saving money for your golden years: a retirement plan with your employer, savings and investments, and your social security benefits, but there are other ways you can build up a nest egg for retirement such as an individual retirement account.

Individual Retirement Account

An Individual Retirement Account (IRA) is one of the best ways of boosting your pension pot. There are two options: Traditional IRAs and Roth IRAs. The traditional IRA offers tax-deductible contributions to some people but every saver benefits from tax-deferred earnings so you only pay tax when you take the money out during retirement. A Roth IRA offers tax-free earnings if you withdraw over the age of 59½ as long as the account's been opened for five or more years. You'll need to speak to a financial advisor to find out which suits your circumstances.

401(k) Pension

If your employer offers a 401(k) pension, you should take advantage of it as it remains the best way of saving towards retirement. That's because you contribute pre-tax money meaning that you're saving more money than you would have pocketed. For example, a worker in the 15% tax bracket who puts $100 into his pension would only have received $85 in his pay-packet. If your employer is only offering a Roth 401(k) pension, you'll need to think about what your income tax bracket will be during retirement as this type of pension works best for those in a low tax bracket who expect to be taxed higher in retirement.

Catch-up Contributions

Once you hit the age of 50 you become eligible for catch-up contributions. Before that age, your contribution amounts are capped but once you get to your fifth decade you can contribute more in your IRA or your 401 pension. The limits are adjusted each year to account for changes in the cost of living due to inflation but as an example, the 2017 and 2018 catch-up allowances for IRA pensions was $1,000, and savers with a 401 pension could add in $6,000 each year.

Retirement Calculator

Even if you know very little about pensions, you're probably aware how complex they can be. A financial advisor will check your circumstances and figure out the best way for you to save for retirement but before you have that meeting, use a retirement calculator. You'll find lots of different ones online but they all ask the same sort of questions including your age, the age at which you'll retire, your expected social security income, your current income and the percentage of that income you'll need after retirement to keep up your lifestyle.

How Do You Pay for Retirement?

Paying for retirement isn't an attractive prospect until you hit your fifties and start to see the end of your career rather than the next step it in but you need to work on your pension before then. Most people make the mistake of thinking about the now rather than the future. It's an easy mistake to make when you have children to pay for or a mortgage to pay off but put aside regular money and you'll grow a nest egg that might allow you to give up work before you realize.

Can You Rely on Social Security Benefits?

More than one in every three 65-year-old living today will see their 90th birthday, and one in seven will reach 95. In 2017, the average Social Security benefit was $1,360 per month or $2,260 for a retired couple. Ask yourself if $16,320 per year for an individual is enough to live on and then decide if social security is enough to maintain the lifestyle you're used to. You can start receiving social security benefits from the age of 62 but if you hold off until you're 70, you'll get more per month so consider whether you can stay employed for longer in order to maintain a higher standard of living.