Super Baby Album

Posts Tagged ‘retirement financial planning’

Whether to make further investments into a traditional IRA and tax-advantaged employer plan retirement accounts versus contributing to “Roth” tax-advantaged employer plan and IRA personal accounts is sometimes a confusing decision.

The decision on the trade offs is one of the very intricate choices of a lifecycle financial freedom plan. A broad array of financial factors can influence whether a traditional tax-advantaged employer plan or IRA personal account contribution versus a “Roth” IRA or tax-advantaged employer plan retirement account contribution choice would be best.

If analyzed properly, the majority of people would find that making investments into a traditional IRA or tax-advantaged employer plan retirement accounts is the preferred decision, when those contributions would be currently tax deductible.

The trade-offs are complex. Back-of-the-envelope calculations cannot analyze all the critical tradeoffs. The preference is not only about whether tax rates might be higher or lower. Instead, the decision needs a fully personalized financial projection and valuation of an investor’s lifecycle expenses, debts, net assets, and taxes.

(Here is where you can find a sophisticated Roth IRA planning calculator that fully automates this regular tax-advantaged employer plan or IRA personal account versus investing in “Roth” IRA or tax-advantaged employer plan personal account financial projection.)

Whether a family will save enough to invest carefully across their lives dominates the Roth retirement account versus the “deductible against current income taxes” traditional retirement plan additional investment decision.

When an investor does not make enough money, cannot save aggressively, does not strictly control investment costs, and/or cannot build up a sufficiently substantial investment asset portfolio, then that investor won’t be in the upper income tax rates when retired — whether or not federal and state income tax brackets have moved up or down in the interim. If an investor will not have substantial enough income and assets in old age, then the present tax advantage an investor will get from deciding on an ordinary retirement account additional investment will tend to be more economically advantageous over a life cycle.

Note: This article ONLY talks about personal financial circumstances where somebody has the choice of making a “deductible against this years income taxes” ordinary IRA or 401k contribution versus a currently “not deductible against current income taxes” Roth IRA or 401k additional investment. If you cannot get a current tax deduction but can make a Roth deposit, then the Roth contribution is more desirable.

A comprehensive and automated lifetime planner with a Roth IRA calculator software is needed to make a much more reasonable long-term money management strategy

In addition, to produce a fully personalized lifetime financial plan demands that you use the top personal financial planning software with the top financial investment software and the best financial planning calculators.

Find a superior comprehensive home financial software home computer application with the top retirement planning calculator program, the first-rate home budget planner, and superior investing calculators for your personally customized life long personal financial planning.

If nothing else, the economy of recent months should have taught us that no one’s financial future is secure today.  In the past we were educated to focus on our 401k investments associated with our jobs and for many of us, this simply was simply done automatcally and forgotten.  Although many financial advisors have jumped ship in recent months, the vast majority simply wanted to sink their clients investments in the stock market.  In the real world, those 401k investments depended too much upon the health of the stock market but most of us were hesitant to look for alternatives.  Today, there is no doubt that we as individuals should take action and personal responsibility for financial planning our retirement.

There are many ways that you can go about personal financial planning for retirement. The first step might be to open an IRA at your bank. Be sure to check if your bank has FDIC insurance for those particular accounts. Though that insurance will not protect you if you take losses, it will protect your investments if your bank were to fail. Recent history has shown us that the financial health of our bank is not always what we might think it to be.  A bank representative will be happy to discuss financial planning for retirement with you in detail but you might do better with an independent financial advisor.

There is no doubt that a basic savings account kept in a bank protected by the FDIC will always be the most secure means of saving for the future.  But be sure to note what current law states is the maximum amount per account is covered under the FDIC insurance.  Most people feel this should be a substantial part of any retirement plan. Be sure to check interest rates but in today’s market, they should vary only slightly if at all.

Money market accounts are safe when financial planning for retirement.  But again check their coverage by federal insurance since they may not always be covered by the FDIC.  Money markets should yield a bit higher interest rate then savings accounts but the money is used for riskier investments by the bank.  They also usually have a minimum amount required for opening the account.

There is an abundance of financial planning information available today on the web.  The most important step is to take responsibility for yourself so you can feel more secure in making decisions about your retirement.