|
At the beginning of each New Year, many of us pause to
reflect on our lives, sometimes deciding to make positive changes which will
impact our own future or the future of those we love. Common New Year’s
resolutions are to eat healthier, quit smoking, or lose weight. These are
admirable goals with short-term results possible and long-term benefits when
the plan is successful. Some decide to do more for those less fortunate, by
volunteering or donating to charitable organizations. All of these resolutions
are worthwhile, positive changes to make. Another idea that would similarly work to improve the
quality of life for yourself and those you love is to invest in a retirement
program. It’s never too early to start saving; the earlier a retirement plan is
initiated, the more likely there will be enough income available to see you
through retirement. And with the future uncertain for programs such as Social
Security and Medicare, self-reliance and supplemental retirement income is
always a smart choice. Those fortunate enough to work for an employer that
offers retirement benefits should consider saving a higher percentage each year,
as well as looking into additional ways to save for the future. For those who
do not have retirement options available through their place of employment, an
Individual Retirement Account, or IRA, is one way to get started with
retirement planning. The money you contribute to a traditional IRA, up to a
maximum annual contribution, is not taxed in the year it is added to the IRA;
it is not taxed until it is taken out during retirement. For 2012, the maximum
amount that could be contributed to a traditional IRA was $5,000, and $6,000
for individuals over the age of 50 (called a "catch-up” contribution). There is
another type of IRA, called a Roth IRA, which is set up with after-tax funds
but then is not taxable when distributed during retirement or any time it is
withdrawn. For those who are self-employed, there are additional IRA options
that are designed to take the place of employee pension plans. One such option
is called a SEP (simplified employee pension) IRA. Depending upon your income
level, contributions to a SEP IRA can be significantly more in a calendar year than
to a traditional IRA, as they are based either on the compensation paid to an
employee or your net profit as a self-employed business owner. IRA’s are easy to open and fund. They are available through
many financial institutions; most likely your local bank will have several
different types from which to choose. Your local banking professional can help
you to determine what type of IRA would offer you the optimal retirement
benefit for the future, and the best tax savings for your financial situation.
Some community banks, such as Texas Gulf Bank, offer complimentary
consultations to help you determine the most effective
retirement planning and wealth management strategies for you and your
family. One of the most convenient features of an IRA is that it does not have
to be opened or funded during the calendar year in order to provide a tax
benefit for that year. To open an IRA and make a tax-deductible contribution
for the 2012 tax year, for example, the IRA does not need to be opened until
the tax deadline (normally April 15th). So if leading a more responsible life in the New
Year is your goal, then quit smoking, adjust your diet and exercise more. But
don’t forget about future planning, tax savings and your financial health. Look
into an IRA for you and your family. And have a prosperous, Happy New Year! |
