The average age of retirement in the United States is 63 years old. With a longer life expectancy than ever, you'll need even more money saved up to retire. The average amount of retirement income *per year* for those over 65 is $73,228 and the median is $47,357. When you think about how much you spend to live comfortably now, it puts into perspective how much you'll need to have saved for the years when you are retired.
When you think about how much you'll need in your retirement years, consider these points:
Desired Retire Lifestyle
Potential Healthcare Costs
Projected Daily Expenses
Cost of Living in your Desired Location
Life Expectancy
This list of items is a bit of a reality check for most people. According to CNBC, data from the most recent Federal Reserve Survey of Consumer Finances for 2019 found that Americans aren't saving enough to have a comfortable retirement.
Growth
Since the most commonly used retirement tools are tied to the stock market, they're subject to market volatility, meaning that if the stock market crashes... so does your savings.
What's more is that you're either paying tax on your savings before or after, not to mention all of the fees...
Fees
Fees typically fall into 4 categories: Investment, Administrative, Individual Service & Custodial and are typically between 0.5% and 2% of your money.
Beneficiaries
You should absolutely have a solid plan for retirement and if you have beneficiaries you'll want to know that any distributions that they would receive, they too would get taxed. A beneficiary who withdraws money from a traditional retirement plan such as 401(k) or IRA must report that money as ordinary income. The tax will then be due with the person's regular annual income tax returns (both state and federal). Yikes.
Surviving spouses can defer the tax by rolling over the account into a retirement account of their own. Other beneficiaries may change the account into an "inherited IRA" and withdraw the money over several years, spreading out the income tax as well, but, with a few exceptions, they must withdraw the full amount in the account within ten years. Ouch.
If you live in Iowa, Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania, note that you might also owe an inheritance tax. Oof.
Roth accounts, on the other hand, are funded with money that has already been taxed, so the accounts are treated like other inherited property but there's no tax deduction in the year of the contribution. With Roth accounts, any distributions that you take are tax free as long as you are at least 59½ years old and have had a Roth IRA account for at least 5 years. So if you’re already in late middle age, this may be a bust. Meh.
Under the SECURE Act rules, most non-spouse beneficiaries have up to 10 years to fully disperse all funds in an inherited Roth IRA. If the money isn't fully dispersed by Dec 31st of the 10th year, there can be severe tax penalties. Eh.
Maximum Contributions
The contribution limit for individual retirement accounts (IRAs) is $6,000 ($7,000 if you are age 50 or older). The maximum amount that an individual can contribute to a traditional 401(k) in 2022 is $20,500. Taxpayers who are 50 and over can make a catch-up contribution of $6,500 for a total of $27,000. So, if you're the kind of person who is trying to save for retirement a little later in life.... this is not good news.
I Come Bearing Good News
What if I told you that we can help you save for retirement with Tax Free
withdrawals for you AND your beneficiaries, where your money can grow regardless of the economy experiencing a pitfall? All reasonable people want to learn more. Look at what we can do for you and your family:
Safety of Principle:
Your Money is NOT invested in the Stock Market
Your Money is NOT Subject to volatility
Your Money is NOT exposed or subject to investment risk
Your Money is NOT Subject to investment loss
All annual growth is LOCKED-IN permanently & CANNOT depreciate in value.
Tax Consequences:
Your Money grows TAX-FREE
There are NO Taxes when you retire & withdraw your money
There are NO Taxes when you die
There are NO Taxes when you pass your money to your family
Access to Your Money:
You CAN ACCESS your money whenever you need it
There are NO early withdraw penalties
You DON'T have to pay it back
Restrictions:
There is NO limit on how much you can contribute to your plan on an annual basis (Up to MEC limit)
There is NO age restrictions on withdraw
Fees:
Charges are a fraction of the expenses & administration costs of a traditional qualified plan. (401(k), IRA, 403(b), 457 plan, etc.)
Effects on Social Security:
Allows you to gain MAXMUM value of the benefit.
No Means Testing
Lifetime Income:
If properly structured, account value will assure lifetime income.
If you'd like to learn more about how we can help you maximize your retirement outlook at no additional cost, contact us today. Keep in mind, it's not how much money you have when you retire, it's how much you get to keep.