William Barrett posted an article on the Forbes website regarding planning for retirement at fifty that has some valuable information that I want to share with you. If you are in your fifties and have not begun to save for your retirement, don’t panic. There is a way to enjoy a comfortable retirement without having to work through your “golden” years. You might have to make some considerable changes in your lifestyle now, but, as Barret says, “they’re almost certain to be less painful than what might be required in 10 or 20 years if you don’t start now.”
The first step you will need to make is saving the money needed to invest. You need to start saving at least ten percent of your gross income. There essentially are two ways to save. One involves paying down high-interest-rate debt that isn’t already tax-deductible, particularly credit-card debt. If you’re paying twenty percent on your credit card, essentially you get an immediate twenty percent return for every dollar you pay off.
The second way is blatantly obvious, simply put the money aside. This is where the tax code will be of assistance. Invest in your company’s 401(k) plan in which contributions are excluded from your current year’s income. In a twenty-five percent bracket, if you contribute $10,000 your taxes will be reduced by $2,500. “Federal law allows workers who will be 50 by the end of the year to salt away up to $22,000 of their own contributions, pre-tax, for 2010.” Investments in these retirement funds grow with a tax-deferment until you withdraw them, at which time they will be taxed at standard rates.
If there is no 401(k) plan available at your place of employment, open an individual retirement account at a mutual fund company or brokerage. You should be able to save up to $6,000 pre-tax a year. If you do have an employer pension plan, no matter how limited, “then you can only deduct the full contribution if your modified adjusted gross income is $89,000 or less for a couple, or $55,000 or less for a single.” But you can make a nondeductible contribution of $6,000 per person to a Roth IRA with modified adjusted gross income of up to $166,000 per couple and up to $105,000 for a single person. The good news is that a Roth IRA will grow without being taxed, and all withdrawals that you make during retirement are tax free.
If you have any questions please feel free to contact me with no obligations. I am here to help. Kevin D. Heupel, Colorado Bankruptcy lawyer, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.
