Most people put a lot of time and effort into planning their week's vacation every year, but they don't plan for the longest vacation of their lives….retirement! Experts agree that once you retire, you’ll need approximately 75% of your pre-retirement income to continue to live in the manner that you’re accustomed to. You can bet that Social Security won’t cut it, so it’s up to you to make up the difference. The problem is that there are so many different options out there to choose from, it’s hard to know what’s best for you: your 401(k)? a Roth IRA? a Trational IRA? The answer to that question depends on your personal financial situation and it’s very different for everyone. That’s why there is no easy answer or turn-key retirement plan out that that’s suited for everyone, so it’s important to sit down with a professional to help guide you in the right direction.

Begin with a solid Financial Plan.
Believe it or not, most people have no idea how much money they’ll need to save in order to retire comfortably and that’s where having a retirement plan can be a big help! We can take a look at your current financial situation (your expenses, your income etc.), factor in things like inflation and taxes, and make estimates about how much you’ll need at retirement. Once we run the numbers, if it looks like you’re not going to meet your goals, we can make recommendations to help get you back on track.

Taking the time to build a plan is crucial…and it can have a huge impact on your future! A recent study done by the Employee Benefits Research Institute concluded that people who have taken the trouble of setting up a financial plan have accumulated nearly five times as much as those who don’t bother to do so!

The Good News: The Roth IRA!
With the new Roth IRA, congress has made it easier than ever to save for retirement! A traditional IRA is essentially based on the same premise as a 401(k): get a tax deduction now on what you contribute, pay taxes later when you withdraw the money. The Roth IRA on the other hand, allows you pay taxes now and you'll never have to pay again! The major benefit to a Roth is that you're paying taxes on a smaller amount and any growth that occurs in the account is yours….tax free! The most you can contribute to a Roth IRA is $2,000 per year or 100% of your earned income, whichever is less. Obviously people are uncomfortable parting with money that they know can't be accessed until age 60, but the new Roth IRA gives you more flexibility in using your assets. If you're younger than 59 ½ you may qualify for tax-free and penalty-free withdrawals if the money is used for a first time home purchase or upon death or permanent disability.

Get started NOW... procrastination can be costly!
Consider the story of Lisa and John. Lisa knew the importance of planning ahead and opened up an IRA at age 21. She set up automatic withdrawals from her checking account, and contributed $2,000 a year into her IRA. She kept this up for 10 years, but stopped at age 31 when she bought her first home. Lisa’s total contribution to her IRA was $20,000.

John on the other hand, didn’t think he had to worry about retirement at such a young age, and finally opened up an IRA at age 31. He also contributed $2,000 a year and continued to do so until he retired at age 65.

Even though John contributed to his plan for 24 years longer, Lisa’s IRA was worth $414,989 more because she got a head start and her nest egg had more time to grow. John contributed more than three times as much money to his IRA, but he still couldn’t’ make up for his late start. For John, the price of procrastination was more than $400,000!

There are so many issues to consider when you’re planning for retirement, and our team of specialists can help! Please feel free to call me at (585) 512-2313 or e-mail me at KDowejko@SageRutty.com to set up an initial consultation, free of charge. With the help of Sage Rutty’s Financial Planning department, we can design and implement an appropriate financial plan based on your objectives and financial situation.