Retirement Planning IRA vs. 401 (k)
Retirement Planning IRA vs. 401 (k) “Many people find all the options that are available when it comes to retirement planning to be quite confusing.” (“IRA-vs-401(k).txt – IRA vs. 401 (k) Many people find all the options that …”) “If you are one of those this article is dedicated to explaining the differences between a 401 (k) plan and an IRA (Individual Retirement Account).” (“What is an IRA and 401(k)? What’s the difference between them? – Mind My Biz”) There will be many terms you will come across during your research that will be confusing until you get the terminology down. (“IRA vs. 401 (k) – LaterLifeNow”) The path to financial does not have to be as complicated as we tend to make it.
(k) “Many people find all the options that are available when it comes to retirement planning to be quite confusing.” (“IRA-vs-401(k).txt – IRA vs. 401 (k) Many people find all the options that …”) “If you are one of those this article is dedicated to explaining the differences between a 401 (k) plan and an IRA (Individual Retirement Account).” (“What is an IRA and 401(k)? What’s the difference between them? – Mind My Biz”) There will be many terms you will come across during your research that will be confusing until you get the terminology down. (“IRA vs. 401 (k) – LaterLifeNow”) The path to financial does not have to be as complicated as we tend to make it.
“I would like to take this opportunity to encourage you to seek the guidance and advice of a professional financial planner.” (“Casey Colston”) The resources and knowledge that a competent financial advisor can share with you will be invaluable when it becomes time to make the decision that will affect how your retirement savings are put to work for your retirement. We go to a mechanic for mechanical advice (at least I do) so it only makes sense that we would go to someone who has trained in financial matters for financial advice. (“March 21, 2022 – Page 5”)
Getting back to business, when it comes to financial retirement planning you should find that both IRAs and 401 (k) plans have strengths and weaknesses. There are also limitations as to how beneficial they can be when used in combination with one another as well as their own limitations. (“READY FOR RETIREMENT”) Every benefit that aids you in taxes and retirement should be considered carefully before leaping.
Let us first look at the 401 (k) plan. “This is a plan that offers a few benefits that are much preferable to many over other retirement plans.” (“IRA vs. 401 (k) – LaterLifeNow”) The first thing you might want to consider is that you can invest up to 15% of your salary or a maximum of $15,000 per year (as of 2006).
Of course, that is assuming that your employer does not have limits on how much you can invest. The money invested in your 401 (k) account is pretax money, so it lowers the amount of taxes you are paying out of each paycheck. Many people also find that because the money is taken from their checks before it arrives it is far less painless to part with. As someone who has closely watched taxes, FICA, and Fido get my money for years I can say that it is no less painful for me, but some find it comforting and that is a real benefit. (“IRA-vs-401(k).txt – IRA vs. 401 (k) Many people find all the options that …”)
Finally, and the most important thing to consider is that many employers will match a percentage of your contribution up to a certain amount each check. As an employee this is a boost to your investment that is well deserved and hard earned. I hope you appreciate the implications it has for your future earnings. You should keep in mind that the penalties for accessing these funds early are harsh indeed to discourage this practice from occurring. Take care that you do not over-invest in these funds to the point that you will need to access them in times other than dire emergencies. (“READY FOR RETIREMENT”)
IRAs are another creature all together. You will find much stricter limitations on IRAs than on 401 (k) plans beginning with the fact that if your employer offers a 401 (k) you must make extraordinarily little money to qualify for the tax deductions that this retirement fund allows. (“What are IRAs? – LaterLifeNow™”) The maximum yearly contribution for your IRA will be $4,000 or 100% of your annual income; whichever is greater up until the age of forty-nine.
Once you have reached the age of fifty you can invest an additional $1,000 to your fund. The other major drawback when it comes to an IRA is the fact that you must begin receiving payments at the age of 70.5 from your account. “You will also be heavily penalized if you make an early withdrawal from these funds.” (“IRA vs. 401 (k) – LaterLifeNow”)
“Whether you choose a 401 (k) plan, a Traditional IRA, or both for your financial retirement investments, I hope you will take the time to discuss the benefits and disadvantages of each with your financial advisor before making your final decision.” (“What are IRAs? – LaterLifeNow™”)
Best Wishes, Coyalita
See Tomorrow:” Long Term Retirement Planning”
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