Saving for Retirement

Begin investing today! Whether you are starting your career or contemplating retirement in the next few years, it is important to make the most of your current earnings. That means paying yourself first. Set aside 2% to 10% or more of your gross salary. Here are a few ways to do that:

• Participate in your employer’s 401(k) or similar plan.  At a minimum, invest the percentage the employer will match. Don’t leave free money on the table. You use pretax salary earned, meaning you are not taxed on it until you withdraw it. Review the investment options and select a mix of equity and fixed income options.
• Combine 401(k) balances from past employers into one IRA rollover. This will open up more investment options and you will receive statements from just one place.
• Open or add to an IRA. Most taxpayers can contribute up to $6,000 this year. Come tax time, the contribution is deducted from your annual income and reduces your tax liability. You will have more investment options than with a typical 401(k) or similar plan.
• Open or add to a Roth IRA.  Most individuals can contribute up to $6,000 this year.   Contributions are made using after-tax dollars. Future distributions are tax-free as long as they are considered qualified by the IRS.

The above examples are retirement accounts and it’s best to think of them that way. If you are younger than 59 ½, there are penalties for withdrawals, plus you pay the income tax associated with the amount of your withdrawal. Start investing today and make your money work for you!

Clinton National Bank  Member FDIC