Retirement Funding: The Basics
The very whisper of the word can be overwhelming. If you’re young, it seems so far away. You’re trying to buy a house, so why worry about retirement funding? If you’re middle-aged, you got college to pay for and vacations to take you’ve been putting off for years till the kids were gone. You still got time. And if you’re older, it seems too late to plan for retirement.
Resolved Financial Solutions in Fairfax, Virginia, aims to explain why retirement funding is essential no matter what stage of life you’re in. It’s never too late or too early to plan for retirement. Read on for important tips of retirement funding.
WHAT IS RETIREMENT FUNDING?
Your body won’t stay young forever. As you age, your body is less capable of doing things. That’s a fact of life we don’t often want to admit. Furthermore, you’ve worked hard your entire life. Why work your entire life?
This is where retirement funding steps in. Retirement funding in essence is having the funds available to use to “fund” or pay for your expenses in retirement without having to work. There are five principal sources in which retirement funding is drawn from: an IRA, a 401(k), a pension, an annuity (or other life insurance product), Social Security, and any personal savings/investments made outside of retirement products.
THE SOURCES OF RETIREMENT PLANNING
- IRA. An individual retirement account is a retirement funding investment product where deposits are made over time, but withdrawals can only be made after the age of 59 ½. While these accounts are great, they have contribution limits.
- 401(k). 401(k) are investment accounts offered by your employer. Using pre-tax dollars, employees can choose which investments to contribute to (individual stocks, mutual funds, CD’s etc) and often employers offer a certain contribution match. Again, withdrawals have to wait until age 59 ½, but these plans are portable if you change jobs.
- Pension. A pension is a type of retirement plan that guarantees contributors receive a certain amount every month after retirement. Older than 401(k)s, pensions are increasingly less popular due to the expense to maintain and the longer life-spans of contributors.
- Annuity. An annuity is a contract between you and an insurance company that is usually a fixed amount of money paid to you over your lifetime after a certain age. Amazing products that can do what no other investment product can (provide you guaranteed income for the rest of your life), the variety and complexity of annuities can be overwhelming. Thus, Resolved Financial Solutions recommends always consulting a financial planner before investing in an annuity to make sure the specific product will fit your needs. An annuity is a contract between you and an insurance company to cover specific goals, such as principal protection, lifetime income, legacy planning or long-term care costs.
- Social Security. Available to anyone who has contributed to social security benefits over the course of their lifetime (basically, if you’ve had any kind of job at all), Social Security. Available after age 62, the payment you receive is determined by the average wages earned over a lifetime
- Personal Savings/Investments. Hopefully, you’ve been saving and investing your entire life, so you have some kind of nest egg to draw upon as you age.
You need money to live. Period. Resolved Financial Solutions in Fairfax, Virginia, is here to help you with all your retirement funding needs. You need to start somewhere. Start here. Contact Resolved Financial Solutions today!