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When it comes to retirement savings, you'll likely rely on one or more of these income sources.
- Employer Retirement Plans - 401(k) Plans
Most large companies and many small and medium companies provide a retirement plan as part of their overall employee benefits program. With a 401(k), employees contribute a portion of their wages to the plan (reducing their taxable income) and their employer usually matches some portion of what the employees contribute. Earnings on money within the plan are not subject to tax until they are withdrawn. Employees can usually choose from a number of choices to invest their funds.
- Individual Retirement Accounts (IRAs)
Anyone with earned income can contribute to an IRA to supplement other retirement savings. Both regular IRAs and Roth IRAs provide tax-deferred accumulation of funds within the accounts. Contributions to a regular IRA may be deductible if you do not participate in an employer-sponsored retirement plan or if your income does not exceed certain levels. Contributions to Roth IRAs are not tax-deductible, but Roth IRAs provide an additional benefit because distributions are not subject to income tax and there is more distribution flexibility. In addition, individuals ages 50 and over can make additional annual contributions.
- Other Personal Savings
Another source of retirement income is other personal savings. While not enjoying the tax preferences of 401(k) plans and IRAs, saving more and earning more on these funds can add greatly to your retirement lifestyle.
- Social Security Retirement Benefits
The Social Security system has played a major part in Americans' retirement planning for decades. The current examination and debate over the future of the system will probably produce some changes for future retirees.
SWSFCU has IRA accounts that can help you save for your retirement. Additionally, you can use the SWSFCU sponsored Financial Planning Program at no charge to credit union members (Jason Vitucci 925-370-3750 or www.vitucciintegratedplanning.com).