How do you get motivated to save for retirement? Joe Anderson, CFP® and Alan Clopine, CPA share smart saving tips for retirement then shed light on why you shouldn’t depend solely on your pension for future income. They close the hour with seven reasons why you should say yes to a Roth IRA. Original publish date January 28, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed.
02:06 “I want to go over in this segment a few ways to motivate yourself to save more for retirement, and I think this is something that’s true for all of us – whether you’ve saved little, none, or a whole lot.”
04:48 “No matter where you’re at – whether you’re in your thirties or in your sixties, you want to be saving as much as you can because retirement is going to happen.”
07:46 “If I save $10,000 after tax (let’s say I have a Roth component in my 401(k) plan), I forgo the $2500 savings today and then it grows to $100,000 and then [when] I pull out the $100,000 I don’t pay any tax at all. Let’s assume we’re in that same 25% tax bracket – that’s a $25,000 savings. So I forgo the $2500 to save $25,000 down the road, versus a $2500 tax deduction today and then down the road paying $25,000 in tax.”
09:25 “If you have the discipline to save that tax savings and you’re in a higher tax bracket, by all means, go for the pre-tax and get that deduction… take that $2500 and save it – put it in a Roth IRA as a contribution; that would be the best [case scenario]…people forget about this because they just spend it.”
16:17 “A lot of companies, as ours, we do have a 401(k) and a match, but it’s not the same amount as a pension plan.”
17:05 “If you do have a pension, private or public – that doesn’t necessarily mean you should just coast.”
19:28 “The most obvious benefit of a Roth IRA is it can provide you with tax-free income in retirement.”
22:56 “A couple of things when it comes to RMDs (required minimum distributions) – you don’t necessarily have to sell the investment. You’re taxed on it, but you don’t need to sell it if it’s in an IRA. You can transfer shares out and put it into a brokerage account.”
27:36 “If you don’t have a Roth, we would encourage you to at least open one up because then that starts your five-year clock.”
28:06 “A Roth IRA can be a great compliment to other retirement accounts. A lot of people don’t realize the power of this.”
32:22 “Roth IRAs are great for estate planning as well because your kids get them tax-free as well.”
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IMPORTANT DISCLOSURES:
Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are not intended as investment advice or to predict future performance.
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• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
