 An estimated 28 million families headed by a worker under age
65 had no retirement savings accounts in 2001. And, while the actual dollar
amount of IRA contributions increased after new tax rules went into
effect, it appears as if the actual number of taxpayers making
contributions to an IRA is still declining, a trend dating back to
1997.
Despite the efforts of the government to help reverse this
situation, two serious problems remain:
1.
Americans aren’t saving enough money to adequately fund their
retirements.
2.
The Social Security system will have increased demands placed
on it as baby boomers age.
Are
you saving enough for retirement? You don’t want to be working at
age 70 unless it’s by choice.
While
some realize the importance of taking their retirement planning into
their own hands, many continue to ignore the urgency of the
matter. Consider the
following as you look towards the future.
How
and where to invest your money
It’s important to make sure your investments are as efficient
and effective as possible.
Are you in a tax bracket that makes tax-free investments more
attractive? How do you
get access to what you’ve saved without giving an unnecessary chunk
of it to the government in taxes? Make sure you know all the
tax implications of distributions from different types of assets
especially if you are under age 59½.
Your overall asset
allocation
As
a general rule, your money should be allocated among different types
of investments and appropriate to your risk tolerance, time frame
and investment objectives.
The closer you are to needing the cash, the fewer
fluctuations you will probably want in the value of your portfolio.
Your
asset needs are destined to change over time, so be sure to consider
rebalancing your account periodically to better realign your
financial future.
Remember, no investment strategy can guarantee a profit or
protect against a loss.
Set
aside as much as you can afford
Here are several tax rules that may help you maximize the
amount you put away for your
retirement:
§
Traditional
and Roth IRAs – contribution
limits (currently $4,000) increase to $5,000 in 2008 depending on
your level of income.
§
401(k)s
and Similar Plans – eligible
deferrals increase from $14,000 in 2005 to $15,000 in 2006.
§
SIMPLE
IRA Plans –
contribution limits of $10,000 as of 2005 ($12,000 if over
50).
§
“Catch-up”
Provisions for those over 50-
Generally, anyone over age 50 can make additional contributions to
certain retirement programs over the usual limits. Consult with a
financial professional in your area for
details.
Tips
for Preparing
IRAs appear likely to be the largest source of non-Social
Security income in retirement for many in the next generation of
retirees (baby boomers and beyond). Don’t wait any longer to
make this investment.
The key to living the lifestyle you want in retirement is
making the right decisions today. Start 2006 on the right foot
by meeting with a financial professional to help you jump start your
future.
Bonita K. Bell is a Financial Representative with
Northwestern Mutual Financial Network the marketing name for the
sales and distribution arm of The Northwestern Mutual Life Insurance
Company (NM), Milwaukee, Wisconsin, its affiliates and
subsidiaries. Financial
Representative is an agent of NM based in Spokane, WA. Securities offered through
Northwestern Mutual Investment Services, LLC, (705 W.
7th, Spokane, WA
99204;
509-444-5866), member NASD and SIPC. NM is not a broker dealer. To
contact Bonita, please call 509-444-5866, e-mail her at bonita.bell@nmfn.com
or visit her Web site at
www.nmfn.com/bonitabell . This
article is for educational and informational purposes only. It is not intended to be
used for tax or legal advice.
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