Saving for Retirement in Springfield
Retirement is a big part of everyone’s life. We all look forward to that day when we no longer have to go to work every week day. Sleeping in, spending more time with friends, and finally having time for all the activities you always wanted to do are events waiting for you in retirement. However, in order to enjoy your retirement to its full potential, you have to plan financially for it. Springfield Banking Rates has put together a list of the most common retirement accounts. Consider which one will best fit your circumstances.
- 401(K) plan – These employer-sponsored plans allow employees to deposit a portion of their paycheck directly into their 401(K). Employers can also choose to match part or all of your contribution. These accounts defer income tax payment until withdrawal, and no taxes are charged on the interest you make. Under special circumstances, you can also open a Roth 401(K) account which allows your contributions to be treated as after-tax dollars.
- Keogh plan – These pension plans come in two varieties: a defined contribution plan or a defined benefit plan. The first type allows you to contribute $30,000 a year or 20% of your income to an account. This contribution remains steady and cannot be altered. The defined benefit plan makes you choose a benefit goal. Then, using a financial professional or accountant, you assess what is necessary to reach that goal and how much you have to contribute.
- Traditional Individual Retirement Account (IRA) – These plans require you to be employed. Up to the age of 49, you can invest up to 100% of your income or $4,000, whichever is greater. After 50, you can contribute 100% of your income or $5,000. If you meet the IRS’s requirements, your plan will not be taxed until the money is withdrawn and then your money will be subject to federal income taxes.
- Pension plan – These tax exempt accounts allow employers to set aside a pool of money for your future benefit. The funds are then invested on the employee’s behalf, and you receive the benefits when you retire. Some employers will guarantee you a certain amount of money and others will simply give you whatever comes out of the investment.
Once you decide which type of plan is right for you, let Springfield Banking Rates help you find the best savings rates to help you prepare for retirement.
