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Retirement Plans | IRA |
401(k) | wwwretirement | RETIREMENTCOM
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RetirementPlanning | IRAs, 401(k)s and
Other Retirement Savings Plans:
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The 401(k)
plan is a type of employer-sponsored
retirement plan. A 401(k) plan allows
a worker to save for retirement while deferring income taxes on the saved
money or earnings until withdrawal.
An Individual Retirement
Account (or IRA) is a retirement plan account that
provides some tax advantages for retirement savings in the United States.
As
with your Social Security and pension benefits, you may want to delay
tapping into your retirement accounts
as long as possible so they can continue to grow to cover unexpected medical
costs in the future or to protect the inheritance for your heirs. However,
if you need to supplement your income,
Individual
Retirement Accounts (IRA) and
other retirement savings can be a good source.
Before you start withdrawing money from your
retirement accounts, most
financial planners suggest setting a target annual withdrawal rate. Make it
low enough to avoid depleting these funds too quickly. You can fine tune
your withdrawal strategy each year, preferably with the guidance of your
financial or tax advisor. For example, if your personal situation changes,
you can adjust how much you should withdraw.
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Also review your
retirement portfolio - your mix among stocks, stock mutual funds,
CDs (certificates of deposit), bonds and so on - to be sure it's
well-diversified. (For ideas about how to rebalance your portfolio as you
age, see Retirement Strategies for All Ages: A "To-Do" List.) |
Another caveat: If you have
retired, every year after age 70 1/2 be sure to take out at least the minimum
required distribution from your tax-deferred retirement savings plans
(except Roth IRAs) to avoid large IRS tax penalties. (If you are still
working at 70 1/2 or later, you do not need to start taking minimum
distributions from your employer's plan until April 1 of the year following
the year you finally retire.)
Medical
Insurance
"Remember, you only have to withdraw the money, you don't have to spend it,"
said Heather Gratton, an FDIC Senior Financial Analyst. "If you don't need
the money you can reinvest it somewhere else, such as in a bank savings
account." She added that, because each person's situation is different, it's
best to discuss your strategy with your tax or other advisor. |
| Source: FDIC |
Retirement Plans | IRA |
401(k) | wwwretirement | RETIREMENTCOM
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