Robert J. McNamara
If what you believed was true turned out not to be, would you want to know right away if it would impact your life forever?
There are four important points that will dramatically change your lifestyle if you are not prepared beginning today:
- People are living longer than ever before
- The value of a dollar could deflate at any time and affect your cost-of-living
- Health issues, serious injury or job loss could eat away all of your savings
- Uncertain government tax changes and new laws could chop away at your contributions
One mistake so many of us make is assuming that what their employer provides will offer a comfortable income stream for them once it is time to retire. Sadly, that is not the case in today's environment. The need to work a part-time job just to cover normal living expenses hangs over us all like a menacing storm cloud.
Do you know how to maximize what you do have with what you might need to make sure this does not happen to you? If you could reduce your taxes to increase your standard of living TODAY, wouldn't you want to know how?
How is a 401(k) plan different from a regular pension?
A 401(k) plan is in your name. You control it, and you take it with you when you move on. The future fortunes of your employer have no effect on your nest egg (assuming you don’t invest it in their stock). However, it’s important you don’t make those decisions alone.
A regular pension, on the other hand, is funded and controlled by your employer. And unless the pension fund is insured, you could lose your pension if the company goes under. Fortunately, most … and the operative word here is MOST larger companies insure their pension funds.
Can I Survive On Just Social Security?
One out of five retirees will have nothing but their government checks because their company does not offer a traditional pension. It will make for a very difficult existence. The average monthly check sent out to Social Security retirees is $1,007. Deduct normal living expenses and there isn’t much left.
A third of people age 65 or over rely on Social Security for 90% or more of their incomes, the Social Security Administration says. For about one out of five people in that age group, or 22%, Social Security checks are the solesource of income.
Can I contribute to my company’s 401(k) plan and also an Individual Retirement Account?
The answer lies in whether your IRA contribution is tax deductible. If you contribute to a 401(k), you’ll only be able to fully deduct an IRA contribution dependent on your earnings. Remember that even if you make a non-deductible IRA contribution, the earnings won’t be taxed until you withdraw the money.
What is a profit-sharing plan and is it enough?
A profit-sharing plan is an employee retirement plan an employer contributes based on their end year profits. Is it enough? Nothing is guaranteed any more and to place all your eggs in one basket would be a greater risk. In today’s world, it’s always better to supplement what your company provides with an individual account. Give us a call and we can help figure out how much or how little will best benefit you.
Should I buy company stock with my 401(k) account?
It’s tempting to want to invest your 401(k) funds in the company you work for. Granted, you probably know more about the company you work for -- its strengths, weaknesses and growth prospects -- than any other. But think twice -- do you want both your paycheck and your retirement riding on the success of one company? Don’t chance what you’ve worked so hard for on the slightest possible your company could run into trouble. If you get company stock through your employer’s matching contribution, that’s great. Give us a call and let us evaluate your total investment plan to make sure you are diversified enough to withstand losses before you buy additional shares for your account.