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How much will you need to save for retirement?
Retirement is not a “one size fits all” proposition. Everyone has a unique idea of how to spend time in retirement in a way that’s enjoyable and personally fulfilling. We ask, “Can you have the retirement you want?”
Questions we will help you answer include:
- How much should I save every year?
- What types of retirement accounts would make the most sense for me from a tax perspective?
- What percentage of my income should I be saving in my employer's retirement plan?
- Should I convert my traditional IRA to a Roth IRA?
The key to a secure retirement is to start early and save often to benefit from many decades of compounding investment returns. Our low-cost investment portfolio options can give you the best possible opportunity to achieve your retirement goals and maintain your lifestyle throughout your retirement years.
Important Retirement Plan Contribution Limits for 2018
401(k)/403(b) Employer Retirement Plans
Maximum 401(k)/403(b) employee contribution = $18,500 with a $6,000 age 50+ catch-up. Under certain circumstances, a 403(b) may qualify for an additional $3,000 catch-up.
Contribution limit = $5,500, with a $1,000 age 50+ catch-up.
Deductibility of Traditional IRA Contributions:
For single taxpayers with a workplace retirement plan, the deduction is phased out at MAGI of $63,000 to $73,000.
For married couples filing jointly, where the IRA contributor is covered by a workplace plan, the deduction is phased out at MAGI of $101,000 to $121,000.
For married couples filing jointly where the individual contributor is not covered by a plan, but their spouse is, the deduction is phased out at MAGI of $189,000 to $199,000.
Eligibility of Roth IRA contributions:
For single taxpayers, the phaseout range is now $120,000 to $135,000. For married couples filing jointly, the income phase-out range is $189,000 to $199,000.
SEP IRAs and Solo 401(k)s
For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) goes up from $54,000 in 2017 to $55,000 in 2018. That’s based on the amount they can contribute as an employer, as a percentage of their salary; the compensation limit used in the savings calculation also goes up from $270,000 in 2017 to $275,000 in 2018.
The SIMPLE IRA
The limit on SIMPLE retirement accounts for 2018 is $12,500, the same as in 2017. The SIMPLE catch-up limit is still $3,000.
Defined Benefit Plans
The limitation on the annual benefit of a defined benefit plan goes up from $215,000 in 2017 to $220,000 in 2018.
Preparing for Retirement? Already Retired?
If you are getting ready to retire or are already in retirement you have probably asked yourself the following questions:
- How can I consolidate my accounts to simplify my finances?
- How much can I safely withdraw from my investment portfolio?
- Should I take my Social Security benefits now or wait?
- Will I be able to maintain my current standard of living?
- How can a Roth Conversion help me reduce my Required Minimum Distributions (RMDs)?
- What are my options for meeting my Required Minimum Distributions?
There actually is a lifetime after retirement and the need to be able to provide for a steady stream of income that cannot be outlived is more important than ever. With the prospect of paying for retirement needs for as many as 30 years, retirees need to be concerned with maintaining their standard of living. We will evaluate all of your sources of income such as employer-sponsored retirement plans, including 401(k) and 403(b) plans, Social Security, pensions, annuities, rental property, and investment assets. Your plan will incorporate your tax situation based on the assistance of your tax professional. Ultimately, we define success as producing a long-term plan that will last a lifetime.
Planning for the transfer of assets at death is a critical element of retirement planning especially if there are survivors who are dependent upon the assets for their financial security. Planning for estate transfer can be as simple as drafting a will, which is essential to ensure that assets are transferred according to the wishes of the decedent. Larger estates may be confronted with settlement costs and sizable death taxes which could force liquidation if the proper planning is not done.
Health Care Needs
Longer life spans can also translate into more health issues that arise in the process of aging. The federal government provides a safety net in the form of Medicare, however, it may not provide the coverage needed especially in chronic illness cases. Planning for long-term care, in the event of a serious disability or chronic illness, is becoming a key element of retirement plans today.
Social Security was established in the 1930’s as a safety net for people who, after paying into the system from their earnings, could rely upon a steady stream of income for the rest of their lives. The age of retirement, when the income benefit starts was, originally, age 65 which was referred to as the “normal retirement age”. Now, for a person born after 1937, the normal retirement age is being increased gradually until it reaches age 67 for all people born in 1960 and beyond. The amount paid in benefits is based upon the earnings of an individual while working. If a person wanted to continue to work and delay receiving benefits, they could do so build up a larger benefit. Conversely, early retirement benefits are available, at a reduced level, as early as age 62.