More than ever before, meticulous planning for a retirement free of fret is mandatory no matter what your age at the moment. The housing bust has taken around 60% of the equity of the American family\’s home, or $100,000 plus for the average family of four. Don\’t count on Social Security, it may wither and die. Whatever measures may be taken to prop it up, chances are good that it will fall apart anyway due to lack of funds. People\’s incomes are either declining or remaining the same, while inflation surges. Budgets are tight and saving is difficult to impossible for many families.

Whether that common scenario defines the status of your personal finances or not, the prevailing uncertain conditions, inflationary pressures, potential tax hikes, and a weaker dollar ensure that no one is immune to the broad forces at work in the global economy today. Only the third little pig who builds his financial house of brick has a good chance at surviving and thriving when it?s time to retire. That takes knowledge and planning to accomplish.

Start Early

Don\’t ever think it\’s too early to start saving for retirement, the earlier you begin, the more the advantage you will get from the blessings of compounding. A 30-year mortgage will have the homeowner paying a small principal early on gradually eroding the huge balance until sometime down the road, the monthly payment becomes mostly principal with little interest. Compounding works the same only in reverse.

Suppose you get an 8% return on an investment annually, your original cash outlay will almost double every nine years. In 30 years, a $1,000 investment will be worth approximately $10,000. If you added $1,000 fifteen years ago, the compounding would not even bring half that amount, it would be worth around $3,000. The $1,000 invested ten years ago would be worth a mere $2,000 and after five years, about $1,400. The later years of the investment period is where the wonders of compounding are the most obvious as the numbers grow ever bigger and bigger every year.

The Advantages of Tax Deferrals

So, now you see that if you are compounding $700 or $800 per year instead of $1,000, you would wind up with tens of thousands of dollars less in your retirement nest egg at the sunset of your career. This is what happens to you and your money if you are silly enough to invest only post-tax dollars instead of pre-tax dollars. IRA\’s Roth IRAs, 401(k)s, 403(b)s and other investment opportunities the government allows where you can defer taxes must be taken advantage of to the total extent you can manage.

This will lower your taxable income now, and every $100 you put into a tax deferred account instead of giving to the IRS today could be another $500 or $1,000 you have when you retire. You will have to pay tax on the money as you withdraw it after retirement, but chances are your income level and tax rate will be less then. Tax deferrals are a \’win\’ now and again when you retire.

Other Considerations

It can become a complex equation to balance your budget and needs for today with plans and expectations for your future, especially as career changes and the curve balls of life (like marriage, kids, college, divorce, and unexpected occurrences) continually change the landscape of the present and the needs and desires for your future.

It is very important to deal appropriately with employer matching contribution, rollovers and beneficiaries and to choose the right type of funds – long-term, short-term, treasuries, growth, income, gold, college funds, insurance, mutual funds, monetary funds. There are lots of things to stay on top of in an ever-changing and volatile market place and nervous economy. You know what your needs are, your financial guru is the expert on matching those needs to investments to plan the optimum financial future for you.

For additional information on financial services, 401(k) rollovers, or any other wealth management topics, please visit Kennard Wealth Management Group of Ann Arbor.

Find more finance info at http://www.kennardwealth.com/financial-services-ann-arbor-mi.html, http://www.kennardwealth.com/, or by stopping in.

Author Bio: For additional information on financial services, 401(k) rollovers, or any other wealth management topics, please visit Kennard Wealth Management Group of Ann Arbor.

Category: Finances
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