Saving for Retirement…..Choices to be made

The key to Retirement Savings is to start saving early….then continue.  If you have it taken out of your paycheck as direct withdrawal, you won’t see it, you won’t miss it.

It’s a matter of preference which retirement ‘vehicle’ you open and contribute to…. there are various ones:  Roth, IRA’s, each have their own rules.  Contribute the full amount you’re allowed, or if not, as much as you possibly can.

Whatever you choose, know that the money cannot be touched until you turn 59 1/2 years old.  Then, and only then, can you begin to withdraw from the account…without penalty….however, you will owe taxes on the amount withdrawn.  Should you ‘need’ the money ahead of 59 1/2, you will incur huge penalties from the account itself, as well as huge tax penalties  Taking monies out before this age, is strongly…. not suggested.

The age most retire, is mid sixties, and even then, some still don’t touch their retirement accounts, instead they allow them to continue to grow.  These retirees may have Social Security, along with liquid savings they’ve been adding to all their working years.  Kudos to them.

At age 72, you are required to withdraw from any IRA’s you have.  Uncle Sam determines how much money will be taken from your account and sent to you.  This amount is mandatory, set by government tables.  It it called “Required Minimum Distribution” … otherwise known as ‘RMD’.  It’s been accruing interest over the years, so you will owe taxes on the amount withdrawn the following April 15th.  This mandatory ‘RMD’ amount will vary some each year, still be set by Uncle Same, and once begun, will continue until either the account is depleted, or you pass away.

It is why beneficiaries are important to have in place.  When you open your Retirement Account(s), it is wise to put beneficiaries in place then.  Over the years, as life changes, these beneficiaries can and should be updated, if necessary.