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Retirement……we all want one!

April 21, 2016

Most of us, even those who love their job, dream of the day when we no longer have to work and we get to spend our time in whatever pursuit strikes our fancy. Personally, I’ve been day dreaming about my retirement since my first job. My current favorite is the one where I’m RVing across America. 

Whether your retirement day dreams involve travel, recreational activities or just projects around your own home, the one thing our day dreams don’t generally include is how we’ll pay for it. 

Our students especially have a hard time understanding that the earlier they begin saving for retirement the better. They believe that their will be plenty of time later not realizing that their greatest ally in retirement savings is time. The earlier you begin saving the longer compound interest can work for you. 

Whether or not your employer offers retirement benefits an Individual Retirement Account or IRA is always a good way to build up your personal retirement savings. IRAs come in two types, traditional and Roth. Each have their benefits and you need to carefully evaluate which benefits will be best for you. The difference between the two basically boils down to when you’ll pay taxes. 

With Traditional IRAs your deposits are deducted from your pretax salary, lowering your taxable income now and delaying tax payments until retirement when your tax bracket will likely be lower. 

Roth IRA deposits are made using after tax dollars. Since the taxes were already paid, your withdrawals in retirement are tax free, including the interest you earned on your account.

The question to ask yourself is, would you rather have a lower taxable income now or tax free interest in the future? What ever your answer the sooner we start to save, the better our chances of having financial security in retirement. 

CHALLENGE: Take a peak at this video with a loved one and start the conversation about opening a IRA today! Don’t let it just be talk for long, open one soon!

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