The IRA is one of the most popular retirement savings vehicles. There are several variations, but in recent years, the Roth IRA has become an increasingly popular option. Roth IRA balances grew 51 percent from 2010 to 2013, while traditional IRA balances grew 28 percent over that same period. In 2013 more than $6 billion was contributed to Roth accounts, while only $4.61 billion was contributed to traditional IRAs.1
The Roth’s unique tax treatment is a big factor in its popularity. With a Roth you make after-tax contributions, which means you can’t take a deduction for the money you put into the account. However, your funds grow tax-deferred inside the Roth, and your withdrawals of earnings and interest are tax-free as long as you wait until age 59 ½. That means you can use a Roth to create a tax-free income stream in retirement.
Unfortunately, many people are unable to contribute to a Roth. Your income may exceed the Roth’s limitations. It’s possible that you’ve accumulated much of your retirement assets in a 401(k) or traditional IRA and don’t want to start a Roth from scratch.
What challenges will you face in retirement? For many seniors, one of the biggest financial obstacles is paying for long-term care. The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care during retirement. Long-term care is usually needed for a few years, and 20 percent of those who need care require it for more than five years.1
Long-term care is usually needed because of cognitive disorders such as Alzheimer’s. However, it can also be needed due to things like strokes or mobility issues. Those who require long-term care may need help with things like eating, bathing, dressing or a wide range of other day-to-day tasks. Care is often provided either in a facility or in one’s own home.
As you might expect, long-term care can be costly. If you don’t have a plan in place, you may struggle to get the care you need. Below are three strategies you can use to fund your future long-term care needs. A financial professional can help you develop and implement a plan.
Are you in the homestretch of your career? Can you see retirement on the horizon? If so, you may already be dreaming about vacations, golf outings and time spent relaxing at home.
It’s hard not to look ahead when retirement is so close. However, you also may want to use this period to nail down the final steps of your retirement planning. The last few years of your career may be your last opportunity to boost your savings, minimize your costs or help protect yourself against risk.
Below are a few steps to consider before you head into retirement. If you haven’t yet taken these steps or even developed a retirement strategy, now may be the time to do so. A financial professional can help you implement these steps and others so you can enjoy a long, financially secure retirement.
Is retirement approaching? Feel like you don’t have enough saved? According to a Gallup survey, you’re not the only one. The survey found that more than 50 percent of Americans are worried about not having enough money for retirement. In fact, retirement is Americans’ top financial concern.1
Another study indicates those concerns may be justified. Research from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 That number may represent a good start, but it’s unlikely to be enough to fund a long retirement.
Fortunately, you may be able to get your retirement back on track if you take quick action. If you don’t have a catch-up plan in place, now may be the time to develop and implement one. A financial professional can help you create your strategy.
The 2017 Insurance Barometer Study by Life Happens found that only 60 percent of respondents agreed that single parents of young children need life insurance. On the other hand, 82 percent of respondents said married couples with young children need life insurance protection.1
The difference in the survey results is confounding because single parents are often in greater need of life insurance protection than couples are. A single parent could be a child’s primary or even sole caretaker. If a single parent passes away, the child may have little financial support.
Life insurance minimizes that risk. The death benefit can be used to provide care and financial security for a child. If you’re a single parent without life insurance, now may be the time to examine your options. Below are a few tips to help you get started. Your financial professional can help you determine the correct amount and type of life insurance for your needs.
Do you want to retire early? You’re not alone. Many Americans dream of retiring in their 50s or even 40s. Early retirement can give you the opportunity to travel, explore new hobbies or even pursue a second career.
Unfortunately, early retirement can be a challenging goal. According to a Gallup poll, more than 50 percent of Americans are concerned about having enough money to retire at all, let alone at an early age.1
If you plan ahead and stay disciplined, however, you can potentially retire early. Below are three rules to remember as you develop your early retirement strategy. It’s important to create a plan that’s unique to your specific needs and goals. A financial professional can help you implement the right strategy for you.
For nearly nine years, investors have enjoyed one of the longest bull markets in history. However, recent volatility suggests the possibility that the almost decade-long market upswing could soon come to an end.
Volatility is a constant presence in any financial market. For retirees, that volatility can present a difficult challenge. You may rely on your savings and investments for income. If the market suffers a sharp downturn, you may have less income available to pay your bills and support your lifestyle.
There’s no way to predict the future movement in the market. However, you can take steps to protect your assets and limit your risk exposure. If you’re approaching retirement and haven’t yet analyzed your investment strategy, now may be the time to do so. Below are a few tips to help you get started:
If you’re approaching retirement, you may be in the process of developing a budget and determining how you’ll fund your cost of living. You’ll likely face expenses for things such as housing, food, utilities, travel and more. You may also face costs for things like taxes and debt.
Health care, however, is one major expense category you shouldn’t ignore. Many retirees assume that Medicare covers all health care costs. That assumption is usually incorrect. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
The truth is that Medicare doesn’t cover everything. In fact, there are some services that aren’t covered by Medicare at all, and many are only partially covered. You’ll have to pay the difference, possibly out of your retirement assets.
Since its inception in the 1970s, the IRA has become one of the most popular available retirement savings vehicles. Americans hold nearly $2.5 trillion in individual retirement accounts (IRAs). Those nearing retirement, between the ages of 60 and 64, have an average of $165,139 in their IRA.1 If you’re like many Americans, you’ll rely on your IRA for a significant portion of your retirement income.
One of the biggest reasons traditional IRAs are popular is their favorable tax treatment. You can take a tax deduction for your contributions to a traditional IRA. All IRAs also offer tax-deferred growth. That means you don’t pay taxes on your gains as long as the funds stay inside the account.
Is retirement part of your plans for 2018? If so, you may be busy wrapping up final projects at work and planning fun and exciting ways to fill your time after you retire. This is also a good time to take any final planning steps that could solidify your finances in retirement.
A financial professional can help you identify potential gaps and opportunities and take action. If you’re not working with a professional on your retirement strategy, now may be the time to do so. Below are four important issues to address with your financial professional before you retire:
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