Today, your BBB® brings you the focus for Day Three of America Saves Week—Saving for Retirement. According to America Saves Week, “saving now for retirement will ensure that you have enough money to have a comfortable standard of living when you stop or reduce the amount of hours you work.” What are some ways to save for retirement? America Saves recommends participating in a work-related retirement program, opening up a Roth IRA, or opening a myRA account. For those consumers who are already saving, America Saves recommends increasing the amount you save toward retirement by 1% this and every year.
Three Ways to Save
Participating in a work-related retirement program. According to an America Saves Week article, “employer-provided retirement savings plans, such as a 401(k)-style plan, serve as excellent vehicles to save for retirement.” These accounts have many benefits including direct deposit from your paycheck which automates the savings process, may include matching funds, and some are tax-deferred which means your contributions and the investment savings within are not taxed until you withdraw them. Click here for more information about a work-related retirement program.
Opening an IRA. According to information on the America Saves Week website, “even if your employer doesn’t offer a retirement plan, you can still save for retirement, and get some tax benefits by putting money in an Individual Retirement Account (IRA). Consumers who are age 49 or below can put up to $5,500 in an IRA, and consumers who are age 50 or above can put up to $6,500 for the 2014 and 2015 tax years as long as your contributions don’t exceed your earned income. Click here to find out about the difference between a regular IRA and a Roth IRA.
Opening up a myRA account. This program is designed to make saving for retirement easy for people who need it most – workers who don’t have access to a retirement savings plan at their job or lack other options to save. According to America Saves Week, the advantages of a myRA account are that there is no cost or fees; if you change jobs, the account stays with you; you can withdraw the money you put into the account at any time without paying tax and penalty; it is backed by the US Treasury; you can contribute any amount you choose; and your account safely earns interest.
The big question many consumers have is how much they need to save for retirement. There are several calculators available for this purpose. Two of the calculators are from the Financial Industry Regulatory Authority (FINRA) and the American Association of Retired Persons (AARP).
Here is a bit of advice from America Saves Week about saving for retirement, “Keep in mind that slow and steady wins this race. Even modest monthly contributions to a retirement account for 30 to 40 years can, in part because of the miracle of compound interest, easily lead to an accumulation of several hundred thousand dollars.
For more information you can trust, visit bbb.org/evansville.