If you want to prepare for your financial future, you should contribute to a retirement account. Retirement planning is important, because the Social Security benefits you may be entitled to are probably not enough to live on. Besides Social Security, you will probably need distributions from a 401(k) or 403(b), withdrawals from your IRA, or income from other savings and investment accounts.
Our retirement planners can help you calculate your income needs during retirement and set up your investment accounts to prepare your financial future. Which retirement accounts and investment options are suitable for you will depend on your goals and objectives. To recommend the appropriate mix of assets in your portfolio, we also need to understand your timelines and your current financial situation.
Traditional vs. Roth Retirement Accounts
When you set up your retirement account, you’ll have a choice between a traditional and a Roth account. Traditional retirement accounts allow you to invest your pre-tax income, providing you with a tax deduction for the current year while saving for retirement. When you withdraw the funds during retirement, you will pay income taxes when you might fall into a lower tax bracket.
Roth retirement accounts let you use your after-tax income to save for retirement. While you can’t deduct your contributions, all of your earnings and withdrawals during retirement will be tax free. The advantage to Roth accounts is that you won’t have to worry about paying income taxes in retirement. Many people use a mixture of both types of accounts to maximize their retirement contributions and minimize taxes.