By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®
The earliest and easiest step to retirement planning is opening a retirement account. No age is too young to begin: we opened ROTH IRAs for our sons the first year they had earned income, at ages 7 and 9. Open the account, pick investments and set your discipline to contribute as much as you can each year.
Decades after, your accounts should have grown and the retirement light is somewhere at the end of the working tunnel. At this step, planning for retirement, we ask that clients break out their needs, wants and wishes that will cost money in retirement. Needs are recurring expenses that you must have money for. Wants are for non-essential expenses that may come up regularly or periodically. Wishes are the extras beyond wants.
We compare the cost of needs with future guaranteed income. After all, your needs are certain and therefore many people like to count on the monthly income amount like clock-work. Sources of guaranteed income include social security and pensions. Both are generally irrevocable decisions once the elections to receive benefits are made, so be careful and confident of your decision. (Social security has one year of wiggle-room to reverse receiving benefits, and you must pay back what you’d received.) If a shortfall of guaranteed income is recognized, a portion of your assets may be used to fill that gap. There many options. Just as with your social security or pension decision, be careful and confident in your choice understanding whether or not that option is also irrevocable or difficult to change. Bottom line is, be sure you understand the rules before making any decisions on guaranteed income.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals prior to the age of 59 ½ or prior to the account being open for five years, whichever is later may result in a 10% IRS penalty tax. Limitations and restrictions apply.