Q. How much money will I need to support my ideal retirement?
A. From a lake cabin to world travel and spending more time with family, everyone has a different concept of their ideal retirement.
Your vision for retirement is often informed by your personal values. It can also be greatly affected by things like health needs, family obligations and life expectancy.
Once you identify your own goals for retirement, you’ll be able to sit down and start figuring out how much you need to get there.
Take the first step: try our retirement planner calculator.
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Q. Will I have enough money saved?
A. There’s no easy answer to this question. It depends on a number of things. For example, the amount you save and the amount of debt you carry are factors largely within your control. Others, such as inflation and taxes, are not.
In general, it’s smart to save as much as possible. You can start by taking advantage of employee-sponsored retirement plans or setting up a
personal IRA.
Because in the end, it’s up to you.
The key to making sure you have what you need is creating goals for retirement and taking steps to make them happen.
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Q. My budget is already tight. How can I save enough to ensure a comfortable retirement?
A. The smartest thing you can do is to start saving today—no matter how much you can put away.
In general, you’ll earn more contributing a small amount over many years than you would investing a substantial sum for a short period of time. Over time, the earnings on your earnings can grow to be quite substantial—even if you started out with very little.
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Q. Am I saving the right way?
A. The answer to this question depends on your savings goals, your timeframe and your risk tolerance. You’ll want to choose investments that will help you keep pace with inflation without taking on unnecessary risk. You should also look for investments that won’t push you into a higher tax bracket.
An important strategy for smart investing is asset allocation. Asset allocation lets you spread your investment dollars across various asset classes. A portfolio diversified in this way may be able to bring higher long-term returns with lower risk potential than one that’s concentrated in a single asset class.
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Q. What is a Roth IRA? How is it different from a Traditional IRA?
A. You have two choices when you’re deciding between a traditional tax-deductible IRA and a Roth IRA: Pay taxes now or pay them later.
If you qualify for a tax-deductible traditional IRA, you can reduce your income taxes by deducting your eligible annual contributions. That means you avoid taxes up front. But once you start taking distributions, you’ll pay taxes on every tax-deferred penny you withdraw. There also may be penalties if you take money before age 59½.
With a Roth IRA, you pay income taxes up front. (To learn more about qualifications for contributions, see Compare Types of IRAs.) However, your withdrawals are tax-free once you own the account for more than five years and as long as you’re over age 59½.
Learn about Roth IRA, and compare IRAs for a better understanding of your tax-deferred savings opportunities.
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