Saving for College and Retirement… All at Once
Contemplating both college savings plan and retirement plan simultaneously may feel like a near impossibility to most, especially when there are bills to be paid in the present day. It would, all the same, be wise to plan and save now to the best of your ability, so that when the time comes to lean upon your college and retirement savings, you won’t be struggling just to make ends meet.
Trusts, bonds and savings accounts, to which you or others may contribute, are prefect examples of different ways to hold onto your money for specific, later purposes. Organization will be integral in keeping track of which assets go toward what goal, but it would be wise to have all of these options in mind for your college and retirement savings goals. And if you have a whole life insurance policy, or another sort of life insurance policy with a savings component attached to it, you can use that tax-deferred money toward an objective that’s a priority to you (including college or retirement savings).
But in addition to those more general college/retirement savings components, you also will likely have options that can be used individually toward one or the other. For example, a 529 plan is a savings plan that would be used specifically toward funding a college education. And conversely, pension plans and 401k plans would be implemented when putting together a financial plan for retirement (though a 401k could be dissolved and used for other purposes, after fees and penalties are applied).
More than anything, you’ll need to keep a close eye on your saving – and spending – in order to manage your finances properly while putting away from college and retirement savings. All the same, we realize that there are monthly bills to consider, and that emergencies happen (most of them not free). It may seem impossible to achieve all of these goals at once, but trust us when we say that it can be done.
What are Roth IRAs and Roth 401Ks, and how can they help me with saving for my retirement?
Individual retirement accounts, or IRAs, and 401ks, are two of the best means of saving your retirement funds. Each fund option comes in either traditional or Roth form, both of which give you the opportunity to save in a tax-sheltered manner, but by doing so in different means.
Traditional IRAs and 401ks hold money that is tax-deductible on your federal income tax return, while Roth IRAs and 401ks house post-tax money. So the problem with traditional IRAs and 401ks is that, when you take the money out for use, it is subject to taxes (since it never was before). However, when you use the money in the Roth holding options, they are free of income tax implications.
In order to enjoy this tax-free status, you have to keep your money in the Roth account for at least five years, and you must either be over the age of 59 (and more than halfway toward age 60), taking the withdrawal because of a disability or to pay a first-time home buyer expense of $10,000 or less, or making the withdrawal by your estate or beneficiary in the event of your death.
Due to the ability to take out money from Roth IRAs and 401ks without penalties or taxes, even with stipulations, makes the Roth option far more appealing to investors. Roth IRAs and 401ks also don’t mandate a minimal withdrawal the way their traditional counterparts do.
BeamaLife can help you save thousands of dollars in your income and estate tax through pension plan and life insurance strategies now.
Happy Presidents Day!
Regardless of your political leanings, everyone enjoys a day off, especially in the name of paying tribute to leaders past and present. It can be the perfect opportunity to catch up on other tasks that may take a backseat to your everyday life.
We at BeamaLife will still be in the office though, working hard to offer you advice on term and whole life insurance, college and retirement savings plans, disability and long term care insurance, and other potential financial concerns you may wish to address.
So give us a call today, toll-free, at (866) 972-3262 or visit our Web site (beamalife.com) for more information and assistance!
More Older People at the Workplace!
Here are some eye popping statistics from the US Bureau of Labor about retirement savings and how more people are working today to bridge the retirment income gap.
Between 1977 and 2007, employment of US workers 65 and over increased 101%. The number of employed men 65 and over rose 75%, but employment of women 65 and older increased by nearly twice as much, climbing 147%.
While the number of employed people age 75 and over is relatively small (0.8% of the employed in 2007), this group had the most dramatic gain, increasing 172% between 1977 and 2007.
