Far too many people do not fully consider their retirement options and are not prepared for retirement. According to Investopedia, the average savings for people aged 55 to 64 is just $104,000, which produces income of just $310 monthly. This is obviously not enough to live on, even if you factor in that you will also be receiving Social Security… especially since the average social security payment is just $1,341, according to Motley Fool.
You don’t want to struggle during your retirement years and spend your life as a senior worrying about affording the basics. You want to enjoy your life. Nirenstein, Horowitz & Associates can help. We work with you to understand different retirement options so you can make a financially sound plan.
Our legal team knows the laws and understands the types of accounts that are available to help you save for retirement. We can advise you on what kind of accounts to open, how much to save, and when to start taking money out. Give us a call to find out more about how a Connecticut retirement planning lawyer can help you.
Understanding Your Retirement Options
There are different retirement options available to you for investing retirement savings depending upon factors including your work situation and your income. Some common options that people take advantage of for investing to save for retirement include:
- 401(K) accounts
A 401(K) account is a great option for investing in for you retirement.. provided that you work for an employer who offers a 401(K). Not all employers provide this type of account. You also need to look at the rules for what you can invest in with your employer’s 401(K) to make sure there are investment options which are attractive to you. A 401(K) makes investing with pre-tax funds possible, which is a major benefit. Your employer may also match a portion of your savings. If your employer matches your retirement investments up to a certain percentage, you should make certain that you invest at least that much in your 401(K) as there is no reason to leave free money on the table.
- A traditional IRA
A traditional IRA allows you to invest a set amount of money each year, as long as your income is below a certain level. As of 2015, you can invest up to $5,500 with pre-tax money into a traditional IRA. However, there are income limits that apply if either you or your spouse is covered by a workplace retirement plan. If you make too much and either you or your spouse has a plan at work, the amount of pre-tax money you are allowed to put into an IRA starts to be reduced until it reaches $0.
- A Roth IRA
A Roth IRA has the same contribution limits and income limits as a traditional IRA. The difference between a Roth and a traditional IRA centers around when you get a tax break for your retirement investing. You invest with after tax money if you opt for a Roth IRA, which means you do not get a tax break when you put the money in. However, you do get a tax break later because you can withdraw money from an IRA without being taxed as long as you meet distribution limits and are old enough to begin taking withdrawals. A Roth IRA is a better choice if you think it is likely you are going to be in a higher tax bracket as a senior than when you are working and investing to save for retirement.
- IRAs for Business Owners and the Self-Employed
If you are self-employed, own your own business and/or have non-wage income, there are also additional retirement options for you to invest in. For example, you could create a SEP-IRA or a SIMPLE IRA. These types of accounts make it possible for you to invest more money each year that you get tax breaks on than you would be allowed to invest if you used a traditional or Roth IRA. You may also be eligible to take advantage of tax-free retirement investing even if your income is higher. The rules for SEP and Simple IRA can be confusing and those who may be eligible due to their business income should talk with a retirement planning lawyer.
Getting Help from A Connecticut Retirement Planning Lawyer
Nirenstein, Horowitz & Associates can provide you with invaluable assistance with the retirement planning process. We help you to understand all of your retirement options so you make smart choices. Give us a call at 860-548-1000 or contact us online to speak with a member of our legal team to learn more about how a Connecticut retirement planning lawyer can help you.