Zeroing In on Retirement

If life is a journey, retirement is the destination where one hopes to enjoy long-awaited rewards for years of hard work. However, a successful retirement doesn’t just happen; it requires an aggressive plan of attack. That’s where retirement planning comes into the picture.

Pieces of the Puzzle

Retirement planning is like a jigsaw puzzle with many pieces. Once you fit together all of the interlocking pieces of the puzzle, you will be able to set up the best retirement plan for your specific needs. Following are four important pieces of the retirement planning puzzle:

1. Social Security—Most working Americans will receive Social Security benefits based on how long they worked, how much income they have earned, and at what age they choose to retire. In most cases, Social Security will not be enough to provide a comfortable retirement income.

2. Company-sponsored pension plans—An employer may fund a benefit that is taken as a monthly income by employees at retirement. A key factor in determining the amount of income you will receive is the age at which you choose to retire.

3. Employer-sponsored retirement plans—In defined contribution plans such as 401(k)s, the employee contributes a portion of his or her pre-tax income to the plan, and the employer may match a portion of the employee’s contribution. Not only do these plans present an immediate return on your money, but earnings also have the potential to grow tax-deferred.

4. Your personal savings—A disciplined savings program, in addition to any other retirement benefits, can help you accumulate and supplement retirement wealth.

Taking Positive Action

Your first step is to assemble the pieces of your financial puzzle to determine if they are sufficient to provide a comfortable retirement. If so, keep up the good work. Set your sights on the retirement of your dreams. Early planning can help you avoid having to make financial sacrifices during your retirement. If you currently expect a funding shortfall, develop long-term strategies to meet your goals.

Although Social Security and your company’s pension plan offer relatively fixed benefits, you may be able to enhance your 401(k) contributions and personal savings. Regular contributions and tax-efficient choices can help you build financial security over time.

If you can, maximize contributions to your 401(k) or other employer-sponsored plans. [Note: Contributions to your 401(k) come from pre-tax salary, and tax on both contributions and earnings are deferred until you retire.] Individuals under age 50 may defer up to $18,000 in 2017, and those 50 and older may defer up to $24,000.

Contribute to an Individual Retirement Account (IRA). Up to $5,500 may be contributed in 2017. Those age 50 and older may make additional contributions up to $1,000. If you qualify, all or a portion of your contribution may be tax deductible.

Whether you are in your 30s, 40s, or 50s, now is the time to start planning for your retirement. Your financial professional would welcome the opportunity to help you determine your future needs and devise a strategy to meet those needs. The sooner you put your plan of attack into action, the better your chances of securing a future of truly "golden" years.


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