Archive for the ‘401(K) Plans’ Category

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How Much Can I Contribute to my 401(k)?

Friday, March 8th, 2013

As we’ve discussed before when giving the 411 on 401(k)s, these retirement savings funds are an easy way to grow the money you set aside for life after the workforce. That’s because many employers will match at least part of what you put away in your 401(k). But exactly how much can you save each year in these plans? Our recommendation is as much as you can, since this money gets taken out of your paycheck before taxes are withheld, decreasing overall taxable income.

Currently, you can contribute up to $17,500 to your 401(k) annually. If you’re over the age of 50, you may qualify for an additional $5,500, bringing the total up to $23,000.  Each year, contribution limits are adjusted in order to account for inflation, which decreases the value of the dollar over time. What this means in planning for retirement is that you have to put more money into your savings in order to have the same purchasing power.

The best way to save with a 401(k) is to contribute as much as you need to in order to qualify for your employer’s highest matching contribution percentage. Work with your company’s human resources department to determine how much you need to contribute to get the best possible match that you can, thereby maximizing your retirement savings.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

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Retirement 101: How Do 401(k)s Work? Tips from Baltimore Financial Advisors

Friday, February 22nd, 2013

401(k)s are a staple of retirement saving and planning, but how do they work? Let us explain. With a 401(k) plan, you can either choose to receive cash payments from your employer in real time, or defer receiving a portion of your income to be placed in the retirement plan. The money that you defer is known as elective deferral or pretax contribution, and is made up of pretax dollars, rather than being a part of your income. This means that your yearly taxes are reduced, since the money placed in a 401(k) isn’t taxed until you begin receiving payments from the plan.

Here’s an example. Say you make a salary of $30,000, and contribute $4,500 of that money annually in your employer’s 401(k) before taxes. The amount of income you earn that is subject to being taxed is $25,500, since the deferred money isn’t taxed until distribution is received.

The Maryland financial advisors at Safe Retirement solutions in Baltimore can help you make the most of your 401(k) and educate you on the ins and outs of this savings system.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

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Retirement 101: 401(k) Field Guide from Towson Financial Advisor

Friday, January 11th, 2013

Want the 411 on 401(k)s? We’re here to offer it. Signing up for a 401(k) is like signing up for free money in the bank, and in fact, the more money you put towards it, the more no-bars cash will wind up in your pocket. Here are the top three most miraculous money-making aspects a 401(k) has to offer:

-       Whatever you put towards your 401(k) gets taken out of your paycheck before taxes are withheld, meaning you get an instant tax break and decreasing your overall taxable income.

-       Many employers will match at least part of what you put away in your 401(k). The standard offer is 50 cents to every dollar for the initial 6% invested.

-       Until you withdraw your investment, you wont have to pay annual taxes on capital gains, dividends, and other distributions. This is known as tax-deferred growth.

What’s more? As of the 2012 tax year, the federal cap on contributions is $17,000. In addition, under the Tax Relief Act, workers aged 50 and older are permitted to play catch-up, contributed up to an extra $5,500 each year to their 401(k). That being said, individual employers may have different restrictions on the amount of contribution – check with your benefits team to determine how much you can put away every year. Also be sure you’re aware of how much time you have to put in at a company before you can walk away while still gaining your employer’s contributions.

One important consideration: withdrawing money prematurely from your 401(k) does not come without penalties. Access your cash before the age of 59 ½ and you’ll have to pay income taxes on whatever you take out, plus a 10% penalty.

The Maryland financial advisors at Safe Retirement solutions in Towson can help you make the most of your 401(k) and educate you on the ins and outs of this savings system. For more information, call 877-268-4086 or visit our website today!

Follow us on Facebook, Twitter, LinkedIn, and Google+ for more retirement planning tips.

Sources:

Retirement: Virtues of the 401(k)

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Recap on a Study of Bull Markets and Retirees: Annapolis, Maryland Retirement Advisor

Saturday, November 17th, 2012

During bull markets – times of increased investor confidence and anticipated capital gains – make people more prone to retire, but abandoning employment during peak economic times can create financial strain down the line for retirees.

At least, that’s what can be gleaned from a recent study performed by researcher Rui Yao, professor of personal financial planning at the University of Missouri and published in the Journal of Personal Finance. Yao examined the financial and retirement statuses of over 4,000 American households spanning the period from 1992 to 2008 that included retirement aged individuals. The data demonstrated that for every 1% yearly increase in market returns, there was a 2% increase in the probability of a retirement aged individual calling it quits at work.

Yao attributes the correlation between a better economy and the decision to retire in part to the fact that potential retirees are able to more swiftly reach their savings goals while money isn’t tight. But retiring immediately after reaching said targets can cause financial problems later in life, especially because with the cyclical nature of the economy, after a peak, the market is likely to take a downfall.

Economic turns for the worse can create substantial loss for stock-based retirement funds like 401(k)s and IRAs – a problem in particular for those who retired when only barely meeting their savings needs.

Rather than risking outliving retirement funds and dealing with worry over finances during what is supposed to be the golden years of relaxation, it is better to continue saving even when the market is doing well to develop a cushion that can usher retirees through potential economic downturns.

In order to plan for retirement and pad your savings for the future, consider consulting with a professional financial advisor. Safe Retirement Solutions services the Annapolis, Maryland and surrounding areas, preparing clients for their retirement years, handling such details as the planning of income distribution, tax benefits and deferrals, and the general security of their nest egg.

For more information about Saving for Retirement and our services or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

You can also follow us on Facebook, Twitter, LinkedIn, and Google+!

Sources:

Booming Economy? Better keep working

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Trends in Retirement Planning: Saving Trumps Investing

Monday, October 15th, 2012

Investments have long been a part of the process of retirement planning. As the profitable cousin to saving, investments have helped to garner supplemental income for people post-workforce as they settle down for life without a full-time job. With the economic downfall, however, recently, savings has become the underrated and yet highly valuable family member, as investments have made a dive for the worse.

Though many Baby Boomers may be making this discovery a little too late, younger generations have been proving to alter their lifestyles accordingly. Between 2003 and 2011, the number of employed adults under the age of 25 contributing to their 401(k) plans increased by nearly 50%, according to Strategic Business Insight’s MacroMonitor. And in order to put money away in the bank, this younger set is making some economical decisions, driving older cars, paying off debts as quickly as possible, and saving at high interest rates.

Because of these shifts in the way retirement preparation is conceived, Wall Street professionals and financial planners everywhere will have to make changes that mirror the ones popping up around retirement planning. That is, they will have to adjust from providing advice about selling products to advice about saving money for financial peace of mind in the future. In essence, guaranteed money, even if of a lesser total sum, has become more important than the potential profits reaped from hypothetical and risky investments; security is key.

The trend in stock and bond obsessions came about in the late 70s, when Wall Street transformed from small partnership firms into global institutions – before that, investments were fairly conservative and planning for the future centered around saving. The Great Recession has ushered this more cautious trend in retirement saving back into style.

The professional advisors at Safe Retirement Solutions are happy to help you figure out how to cut costs and maximize savings in order to align with the current recommendations and directions of retirement planning.

For more information about Saving for Retirement and our services or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Source:

The New Retirement Plan: Save More, Invest Less

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Companies Contribute to 401(k) Programs

Saturday, September 8th, 2012

During the economic downturn of 2008, a lot of employers put a halt to 401(k) contributions, directing their funds towards other endeavors. But for the first time since the financial meltdown four years ago, many companies are again beginning to provide payment towards their employers’ retirement plans.

About 73% of companies are now matching employee contributions to their own savings plans, and businesses are reaping the rewards: improved 401(k) plans serve as attractive incentives for workers and help inspire employee retention.

401(k)s allow employees to put away as much as $17,000 in tax-free money each year, usually with some match from employers. According to the Employee Benefit Research Institute, about 23.4 million American workers participate in 64,455 employer-sponsored 401(k) plans that hold around $1.4 trillion in assets.

Not only are companies now contributing more financially, but more and more of them are also offering investment advice to their workers. Particularly with the tough financial market in the last few years, more and more Americans feel the need to consult with professional advisors who can usher them into retirement at ease.

At Safe Retirement Solutions, our trained and experienced financial planners are here to do just that for you: simplify and streamline the process of saving for retirement.

For more information about Professional Financial Planning and 401(k)s, or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Safe Retirement Solutions’ financial advisers help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

You can also follow Safe Retirement Solutions on Facebook and Twitter.

Source:

Recovery sign: Employers are contributing to 401(k)s again

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A Generational Difference: How the Prospect of Retirement has Changed

Friday, August 17th, 2012

For Baby Boomers, the prospect of retirement has, by and large, been as secure as a house with a state-of-the-art alarm system in a neighborhood not prone to crime.  Their residences have had great foundations, too, with a job, home ownership, Social Security, and in many cases, a pension holding it up.

For Generation X, however, that infrastructure began to crumble when pension plans were replaced by 401(k)s in the 1980s, replacing employer investment with worker contribution.  This put investment risk and control in the hands of the employee.  With the Great Recession causing equities to plummet by 45% in 2009 and the housing market decreasing real estate prices by 34% since 2006 and forcing many into foreclosure, Gen X Americans have faced further troubles.

Generation Y’s retirement protection is about as invulnerable as a computer exposed to an excess number of viruses, which is to say – not at all.  These Americans must attempt to keep the structural integrity of their homes in tact, so to speak, with only two factors: a job and a 401(k).   But the troublesome task of finding a job and remaining employable coupled with the issue of copious amounts of student debt makes Gen Y’s prospect of secure retirement even less stable.

College graduates are having difficulty landing reliable jobs, and the financial obligations that came along with earning their degrees means that when they do find work, much of their money must be sacrificed towards their debt, not their retirement funds.  The average yearly cost of just one year of college can range anywhere from $19,300 to $37,400, depending on the institution and whether it’s a public or private university.  This means that graduates are entering the tough job market with more debt than any other previous generation.

Given these facts about Gen Y’s financial situation, it’s not surprising that in a recent study by Ameriprise Financial, job security was revealed as the number one concern for members of Generation Y.  Without that security, retirement savings becomes a difficult reality, especially when student loans serve as a barricade to 401(k) participation.

At Safe Retirement Solutions, we want to make sure that even with the troubling economic situation, you do not feel discouraged about the hope of retirement and saving for your future.  Our team of financial advisors can help you to plan effectively for your life after the workforce, helping you to save money even if there doesn’t seem like there’s enough to go around.  We’re here to help you meet your retirement goals and dreams.

For more information about Professional Financial Planning, or for professional financial advice, consult the financial advisors at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Safe Retirement Solutions’ financial advisers help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

You can also follow Safe Retirement Solutions on Facebook and Twitter.

Sources:

Gen Y faces retirement as a go-it-alone affair

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The ins and outs of 401(k) Plans: How do 401(k) plans work?

Tuesday, June 26th, 2012

Ok, so you have heard of a 401(k) plan before. You kind of know what it is supposed to do, but you are not quite sure at how it works. Luckily for you, the financial specialists at Safe Retirement Solutions are here to help!

What is a 401(k) Plan?

401(k) plans is actually the slang term for qualified cash or deferred arrangements (CODAs) permitted under Section 401(k) of the Internal Revenue Code.

How do 401(k) Plans Work?

401(k) plans have become one of the most popular types of employer-sponsored retirement plans, but how do they work?

With a 401(k) plan, you elect to defer a portion of your wages, contributing that amount to your plan. The amount you defer, known as an “elective deferral” or “pretax contribution,” isn’t included in your income.  This tax-deferred portion – along with any other investment earnings – isn’t taxed to you until you receive payments from the plan.

How much Money can I contribute to my 401(k) Plan?

There’s an overall cap on your combined pretax and Roth 401(k) contributions. These include:

  • You can contribute up to $16,500 of your pay ($22,000 if you’re age 50 or older) to a 401(k) plan in 2011.
  • If your plan allows Roth 401(k) contributions, you can split your contribution between pretax and Roth contributions any way you wish.
  • If you also contribute to another employer’s 401(k), 403(b), SIMPLE, or SAR-SEP plan, your total contributions to all of these plans—both pretax and Roth—can’t exceed $16,500 ($22,000 if you’re age 50 or older).

It’s up to you to make sure you don’t exceed these limits if you contribute to plans of more than one employer. If you need help with your 401K Plan or any other financial investments, then consider Safe Retirement Solutions. We are here for you!

For more information about 401(k) Plans, Professional Financial Planning or Financial Advice, consult the financial advisers at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Safe Retirement Solutions’ financial advisers help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

You can also follow Safe Retirement Solutions on Facebook and Twitter.

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You Graduated College…now what? It’s Time for a little Financial Planning!

Wednesday, June 20th, 2012

After graduating from college, young men and women have many things to worry about, especially when it comes to finding a job in today’s business world.  But what many recent grads fail to take into consideration is their financial future.

The best time to start saving for your retirement is NOW!

Financial Advice for Recent College Graduates

  1. Save as much as you can now: Try and save as much money as you can while you are young. Odds are that the future will bring with it many more financial obligations, including a mortgage and a family. But saving along isn’t enough…
  2. You need to Invest: Making the right investments now can make all the difference in the future.
  3. Talk to your Employer: Most companies offer a 401K match plan, which means that your employer will match all or a percentage of what you put away for retirement. If you do not take advantage of this, you are essentially leaving money on the table.
  4. Contact Safe Retirement Solutions: We are a full service, independent financial advisory firm dedicated to providing you with the very best in retirement income planning. Our President and CEO Rod Borowy has been helping people achieve their financial goals since 1975. He considers all of our clients to be a part of the “Safe Retirement Solutions” family.

For more information about Professional Financial Planning or Financial Advice, consult the financial advisers at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Safe Retirement Solutions’ financial advisers help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

You can also follow Safe Retirement Solutions on Facebook and Twitter.

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Retirement Planning Mistakes: Advice on how to advoid them

Thursday, June 14th, 2012

Retirement may be long ways away for you or it could be approaching soon. Make sure you do your research and plan ahead of time. You wouldn’t want to make any mistakes with your retirement.

We know how important retirement is for you, so we devised a comprehensive list of top retirement mistakes you must avoid.

Retirement Mistakes

  1. Not planning: It’s hard to know how much you must save for retirement if you don’t plan in advance. By planning in advance, you will avoid errors and be able to save enough.
  2.  Retiring without a solid plan: Make sure you have a solid plan before you retire. Often times retiring early could also mean not receiving the maximum amount of social security you desire. Once you choose your social security type, it cannot be changed. If you do work a few years beyond what you’ve planned, you will receive a larger bonus in retirement security.
  3. Being unaware of your life expectancy:  Woman are expected to live to an average of 85 years while males can live to be about 82. You must be aware of your personal life expectancy before you make solid plans.
  4. Job search at an older age: Getting a job later on in life is not as easy as you want it to be. Just be aware of that.
  5. Not saving enough:It’s easier to spend than it is to save. The more you save, the cushier your retirement funding will be.
  6. Poor use of qualified money: A percentage of people in the workplace cash out their 401 (k) balance when they change jobs. It’s better to send them into a new plan since taxes and fees occur during the retirement planning process.
  7. Ignoring annuities: Remember to use them. Please do not ignore annuities. It’s the only financial product available which can provide an income for any time period.
  8. Not understanding risk: As retirement approaches be wary of stocks and anything else that could put your retirement at risk. As retirement age approaches, many people make the mistake of have 80 percent of their account in the wrong asset allocation. If you are not aware of market trends, that could result in poor job performance.

Most people, at some point in their lives, will need financial advice. When the time comes for you to reach out to a professional financial adviser, whom should you trust? How can you be sure that the financial adviser you choose has your best interests in mind? How do you know that your money is in good hands?

The Answer: Trust Safe Retirement Solutions!

For more information about Professional Financial Planning, or for professional financial advice, consult the financial advisers at Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

Safe Retirement Solutions’ financial advisers help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

You can also follow Safe Retirement Solutions on Facebook and Twitter.

Sources:

The Top 10 Retirement Planning Mistakes and How to Avoid Them

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