Planning Ahead

Retirement planning options

Bob CondronMarch 25, 2008 

Bob Condron, CFP, MSFS, is a registered representative of Bridge Financial Partners. He can be reached at 548-8875 or bcondron@bridgefp.com.

Accord-ing to the Employee Benefit Research Institute "In 2006, Social Security was the largest source of income for those currently age 65 and older, accounting for 39.8 percent of their income on average." *

Because of the differences in retirement needs, one must ask himself how comfortable he feels relying upon Social Security to provide nearly 40 percent of his income throughout your retirement years.

Each person envisions retirement differently. This month, take a few moments and consider what retirement means to you. Consider where you would like to live and the activities you would enjoy doing. It is much easier to set aside a few more dollars each pay check if you can "see" what you are saving for.

The amount of money you will have in retirement depends upon many factors. Discipline is one of the few factors that influence your retirement plan that you have some control over. You will need the discipline to invest systematically and continuously. The discipline to read the investment literature and understand your investment plan, no matter how boring the material. The discipline not to purchase unnecessary items, no matter how nice those shoes look or how many new ringtones that cell phone has.

The government, through the use of laws and the IRS codes, incentivizes savings for retirement. There are many types of programs and products available for use in funding your retirement. One of the most common retirement planning programs available in the workplace is the 401(k). In a June, 2007 Facts sheet, the EBRI indicated that more than 63 percent of American workers with available retirement programs participate in 401(k) type plans. In 2008, the maximum contribution to this type of plan is $15,500. If you are 50 years of age or older, you can invest an additional $5,000. Many employers offer 401(k) plans that "match" the employee's contribution up to a certain percentage. A 100 percent match on the first 4 percent means that your employer will contribute the same amount of money that you invest up to 4 percent of your eligible income.

If you do not have a 401(k) at work, you may want to consider establishing an Individual Retirement Account. In 2008, the maximum contribution to an IRA is $5,000. If you are age 50 or older, the maximum contribution is $6,000. At certain income levels, your contribution to an IRA may be tax deductible. You should consult your tax advisor as to the tax deductibility of any contributions.

In today's economy, it is not always easy to save as much money as we would like to. The slumping housing market, rising fuel costs and the increasing cost of education for children seem to laugh at our efforts to save a few dollars. But this month, take a few moments to dream, to plan and to set aside just a few dollars more each paycheck.

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