The year is halfway over. Have you met your savings goals so far this year? Are you behind on your savings for retirement? It’s easy to get behind on savings, especially when it comes to retirement, which may be years or decades in the future. After all, you probably have many other expenses and financial challenges that seem more urgent.
Fortunately, there’s still plenty of time left in the year to put away money for retirement. You may want to use qualified accounts to do so. These accounts, which include 401(k) plans and individual retirement accounts (IRAs), allow you to grow your funds on a tax-deferred basis. That means you don’t pay taxes on growth while the assets are inside the account.
Below are three commonly used qualified accounts and how they can help you save for retirement. You still have time left this year to ramp up your savings. Work with a financial professional to implement a savings strategy.
According to recent research from Fidelity, many parents are off track to fund their child’s college education. The study found that 70 percent of parents want to fully fund their child’s tuition and education costs. On average, however, parents are on track to cover only 29 percent of the costs by the child’s freshman year.1
College is a major financial challenge for many families, especially those who have multiple children. It’s only getting more expensive. From 1988 to 2018 the tuition for a private, nonprofit college rose 129 percent. Tuition for public college rose 213 percent over the same period.2
Fortunately, you have options available. Below are three different tools you can use to save for your child’s education. Each offers its own benefits and considerations. Your financial professional can help you choose the strategy that’s right for you.
Is retirement quickly approaching? Worried you don’t have enough saved? You have company. According to a Gallup survey, more than 50 percent of Americans are worried about having enough money for retirement. In fact, retirement is Americans’ top financial concern.1
Those worries may be justified, especially for baby boomers. Research from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 That amount may represent a good start, but it’s unlikely to be sufficient to fund a long, enjoyable retirement.
The good news is there’s still time to get back on track. However, you may need to take action quickly. Below are three simple steps you can take to correct course. A financial professional can help you develop and implement a plan that’s specific to your needs.
According to a recent Gallup study, more than 50 percent of Americans are concerned that they won’t be able to fund their retirement. In fact, retirement is America’s No. 1 financial worry.1 If you’re one of the many Americans who is worried about retirement, you have company.
Fortunately, it’s never too late to take action. With focused planning, you can take back control of your retirement. Below are a few red flags that may indicate you’re not as prepared as you should be. If these sound familiar, now may be the time to develop a plan. You also may want to meet with a financial professional. They can help you implement a retirement strategy.
Your retirement plan may be to save as much money as possible. That’s not a bad idea. Your strategy may consist of contributing to a 401(k), an IRA or even a health savings account. When you’re young and have many years until retirement, asset accumulation is an important priority.
As you near retirement, however, you may want to consider issues besides asset accumulation. It’s important to think about not just accumulating assets, but also how those assets will be put to use. That means asking yourself questions about your desired lifestyle.
Below are three questions you may want to ask yourself as you develop and hone your retirement strategy. These questions can help you think beyond the financial aspects of retirement planning. They can also inform your spending decisions in retirement so you can protect your assets and your financial stability.
Looking to retire early? You have company. For many Americans, early retirement is the ultimate dream. It gives you the opportunity to enjoy your free time while you’re still healthy and relatively young. You can use that time to travel, pursue new interests or even launch a second career.
However, retirement itself can be a challenging goal, let alone early retirement. A Gallup poll recently found that more than 50 percent of Americans are concerned about not having enough money to stop working at traditional retirement age. Early retirement is an even greater challenge.1
The good news is that early retirement is possible if you’re disciplined and you plan ahead. Below are a few tips to consider as you begin your planning. You may also want to meet with a financial professional to help you implement an early retirement strategy.
Retiring soon? Are you in the process of estimating your expenses in retirement? If so, don’t ignore health care costs. Many retirees assume that Medicare will cover most of their medical expenses. While Medicare is a valuable program, it doesn’t cover everything. According to a recent study from Fidelity, the average married couple will pay $275,000 for out-of-pocket health care costs in retirement.1
Your out-of-pocket costs could include a number of different items, such as premiums, deductibles, copays and more. You also may face significant costs for long-term care, which is not reflected in the Fidelity estimate. It’s possible that health care and long-term care costs could deplete your assets.
The good news is there are steps you can take to limit the impact of health care costs on your retirement. Below are three tips you may want to consider as part of your health care funding strategy. If you haven’t yet developed a plan, now may be the time to do so.
Risk management is always important, but it’s an even greater priority in retirement. Without the benefit of a regular paycheck, it could be difficult to bounce back from market downturns or costly emergencies. One sizable setback could be enough to derail your retirement plans.
One major risk you shouldn’t ignore in your planning is the impact of health care costs. Fidelity estimates that the average married couple will spend $275,000 on out-of-pocket health care expenses in retirement.1 That figure doesn’t even include long-term care, which can cost thousands of dollars per month and may be needed for several years.
The good news is there are steps you can take to reduce your risk exposure and protect your retirement. Below are three such steps to consider. If you haven’t yet developed your retirement risk management strategy, now may be the time to do so.
Are you currently planning your retirement income strategy? You may be able to count on income from a pension, a 401(k) or even an IRA. No matter your situation, though, it’s likely that Social Security will be a part of your retirement income mix. Nearly 90 percent of all retirees rely on Social Security benefits for a portion of their income.1
Your Social Security benefit amount is based on several factors, including the age at which you file for benefits. You can file as early as age 62 or as late as age 70. Generally, the longer you wait, the higher your benefit amount will be.
Your career earnings are another important factor. Social Security uses an average of your 35 highest-earning years as a basis for your benefit amount. That could be problematic if you have limited or low-earning work history.
Do you own an IRA? If so, you have company. According to a 2013 study, Americans hold nearly $2.5 trillion worth of assets inside IRA accounts.1 Much of those assets are held in traditional IRAs.
Traditional IRAs, 401(k) plans and similar qualified accounts are popular savings tools because of their tax-favored treatment. You can fund these accounts with pretax dollars. Also, your growth is tax-deferred as long as the funds stay in the account. You can’t avoid taxes on these dollars forever, though.
You can defer distributions from your IRA or 401(k) up to age 70½. At that age, however, you must begin taking required minimum distributions, also known as RMDs. The amount of your RMD is based on several factors, primarily your age and your end-of-year account balance. Generally, your withdrawal will increase relative to your balance as you get older.
Terry L. Tyler