Retirement is the end game that most workers dream of their entire careers. But now, with the near extinction of pension plans and the high cost of living, many Americans don’t know if they’ll ever be able to retire.Many make a modest living and have difficulty saving.
When it comes to saving for retirement, you can definitely start small and think big. In fact, this is your best bet. When you’re younger, you may not have as much extra income to save for retirement, and your workplace may not offer a 401(k) plan for you to contribute towards. However, this doesn’t mean that you shouldn’t save at all. Even small regular deposits into a retirement account now can result in big savings by the time you retire.
Business owners are constantly juggling day-to-day tasks to keep their companies afloat and growing. They must meet payroll, take care of endless paperwork, serve customers, ensure quality control, and cope with unexpected issues and crises. When there are so many immediate priorities demanding attention, it’s easy for busy business owners to forget to focus on the future, especially when retirement is 10 or 20 years away. It’s no surprise then, that almost half of small business owners don’t have a retirement plan.
People follow conventional wisdom in many aspects of their lives, and often, it works out well. When it comes to retirement, however, you shouldn’t just blindly follow rules because others say that you should or because that’s what you’ve always believed. Just because everyone thinks something is true doesn’t mean that it is. Think about it: millions of people once believed that planet Earth was flat, and that certainly isn’t the truth.
During the accumulation phase of retirement, you should be setting aside funds to use later in life. From the moment you step into the workforce, you should be building wealth to provide a source of income during retirement.
As a business owner, executive, or other high income earner, your annual salary might shut you out of being able to contribute directly to a ROTH IRA. High earners with adjusted gross incomes higher than $132,000 (single) or $194,000 (jointly) aren’t eligible for this savings vehicle. However, that doesn’t mean that you can’t take advantage of similar tax-free benefits in other ways. There are still ways for you to be able to save money that you’ve already paid taxes on and withdraw that money, and investment gains, tax free in retirement.For example, you could contribute after tax money into a ROTH 401K, assuming your 401K plan has a ROTH feature.
There’s no quick answer to the question “when can I retire?” Your unique circumstances, such as your health, your lifestyle goals, your life expectancy, your debt levels, your amount of savings, and so many other factors need to be considered. You’ll need to assemble many different pieces and fit them together in order to help bring your retirement picture into focus. You’ll need to crunch the numbers. And you might even need the help of a retirement planner to get a realistic portrayal of your retirement.
Everyone looks forward to retirement. You can finally stop working every day and start enjoying life to its fullest. But to be able to enjoy your golden years—the golfing, the trips, the new hobbies you’ll pick up—as well as pay for bills, you’re going to have to replace your paycheck in retirement.
Retirement has changed over the last few decades. Years ago, Americans expected to work their entire lives for a single employer and receive a traditional pension for their loyalty and hard work. During these times, retirement planning was really just about figuring what you wanted to do with your free time. After all, your income was already figured out for you.
In the 1940s, high income earners who made more than $200,000 a year faced marginal federal income tax rates of over 90%. And, until as recently as 1980, the highest marginal tax rate was 70%.There’s no telling whether or not federal income tax rates will be higher in the future, but, with the country’s national debt currently sitting at $9 trillion, it wouldn’t be at all surprising if the government raised taxes significantly.