If 2021 proved anything, it is that those who plan ahead are better able to handle the unexpected. Let’s review what you should consider doing now to prepare for the future.
This year’s rollercoaster of events may have left you a little shell shocked. But your future will arrive on time, including retirement. Are you ready for it?
The power of time. Young investors like you have time on their side. You can latch onto the long-term trends of the stock market that has historically outperformed inflation and most other asset classes over the decades. And, if you make an investment mistake, you have plenty of time to recover. The trick is not to squander your time advantage by failing to invest for the future.
Setting up your IRA. If you don’t have one yet, you can choose from a number of Individual Retirement Account (IRA) offerings. Whether at a bank, credit union, mutual fund or brokerage, an IRA lets you invest money for your retirement. Both traditional and Roth IRAs provide potential tax advantages that can make a huge difference by the time you reach retirement age.
Funding your 401k. If your employer offers a 401k plan with matching funds, you should definitely consider contributing enough to receive them all. Your money has the potential to grow tax-deferred until you take it out in retirement, when your tax bracket may be lower.
Insurance costs can be lower. Young people are in an ideal position to set up large cash-value life insurance policies and annuities that can cost less to fund due to age. Once again, your money will accrue tax-deferred, and you’ll have plenty of time to build a substantial nest egg.
Saving and investing can create personal wealth. A few simple steps can profoundly alter the course of your financial life. I can help you make the right moves now to take advantage of the opportunities available to you. Contact me today to set up a plan that will lay out how you can pursue your important financial goals while avoiding the mistakes that many young investors make when going it alone.
Qualified accounts such as 401ks and traditional IRA’s are accounts funded with tax deductible contributions in which any earnings are tax deferred until withdrawn, usually after retirement age. Unless certain criteria are met, IRS penalties and income taxes may apply on any withdrawals taken prior to age 59 1/2. RMDs (required minimum distributions) must generally be taken by the account holder within the year after turning 72.
The cost and availability of Life Insurance depend on many factors such as age, health, and amount of insurance purchased. In addition to premiums, there are contract limitations, fees, exclusions, reductions of benefits, and charges associated with policy. And if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Any guarantees are contingent upon the claims-paying ability of the issuing company.
Annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.