Chapter 16 Retirement Planning. Looking Ahead Sound retirement planning involves understanding: Threats to secure retirement Options available to protect your retirement funds. Chapter 16 Retirement Planning. Two Noteworthy Truisms About Retirement
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Sound retirement planning involves understanding:
1. The EARLIER YOU START, the better off you will be.
The later you start, the more money you will have to save regularly.
2. YOU control the protection of your assets.
Be aware that stocks rather than fixed income securities such as CDs will give you HIGHER YIELDS.
1. Start early
2. Save as much as you can afford to
3. Take advantage of tax-deferred savings plans
4. Don’t be too conservative with retirement investments
Three trust funds
To get Social Security number:
Upon death of worker
Qualified retirement plans -- have tax advantages to employer, employee, or both
Around 75% of eligible employees participate
Also referred to as:
Contributions from both employee and employer (usually matched)
Employee has more control over where retirement funds invested
Participation partly or totally voluntary
Two main tax advantages in contributing to plan
1. Taxable income REDUCED by amount contributed
2. Retirement savings grow TAX DEFERRED.
If you leave the job, you will receive lump sum consisting of:
Must have money transferred into IRA other 401(K) or incur penalties
If not covered by qualified retirement plan, can deduct IRA regardless of income
Like regular IRA’s, contribution amounts same and earnings tax-deferred, but:
Triggered by a lump-sum distribution
Options almost unlimited. May include: