Retirement Planning
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You should start thinking about retirement from the day you get your first job, having a plan in place and asking yourself, 'What am I doing to set myself up for the future?'
It's true that for example, a 20-year-old might not easily grasp the concept of retirement 40 or 50 years down the road; most people find it challenging to comprehend. That’s why there are different levels of focus at different stages of life, each building on the growth of one another.
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The government retirement age to receive full social security benefits ranges from 65-67, but ultimately, the best time to retire is a highly personal decision. It's advisable to work with a financial advisor to evaluate your unique circumstances and create a comprehensive retirement plan that aligns with your goals and needs.
Keep in mind that retirement doesn't necessarily have to be an all-or-nothing decision; many people choose to gradually transition into retirement by reducing work hours or pursuing part-time opportunities.
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Owning a 401(k) can certainly be advantageous, especially when a company matches your contributions – essentially free money, an undeniable positive. However, there are instances where it might not be as favorable. Take, for example, being 30 years old and needing access to your funds; if they're all tied up in a 401(k) plan, unlocking them could result in paying full income tax and a penalty, turning it into a drawback.
The appeal of a 401(k) shines when you anticipate a lower future tax rate. On the flip side, if you foresee higher future tax rates, it might not be the most optimal choice.
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The main difference between a traditional 401(k) and a Roth 401(k) lies in how contributions and withdrawals are taxed. Traditional 401(k) contributions are made pre-tax, providing an immediate tax benefit, but withdrawals in retirement are taxed. Roth 401(k) contributions are made after-tax, offering no immediate tax benefit, but qualified withdrawals in retirement, including earnings, are tax-free. Traditional 401(k)s have required minimum distributions (RMDs), while Roth 401(k)s do not during the account holder's lifetime. The choice depends on factors like current and future tax situations, and some opt for a mix of both for tax diversification.
Retirement marks the transition where your financial well-being shifts from relying on your employer to sustain your lifestyle—to your own balance sheet taking the reins. Navigating retirement planning is a pivotal endeavor that demands thoughtful deliberation and meticulous preparation. We specialize in securing a future that is both comfortable and financially sound.
FOCUS AREAS
✔ Determine if a 401k is right for you.
✔ Social Security Benefits
✔ Long term care considerations
✔ Estate Planning
✔ Business Exit Planning
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