Retirement accounts

There are many types of accounts that can help you invest for your retirement — and most people should rely on more than one account to reach their retirement goals. Understanding the features and benefits of each will make it easier to choose the right ones.

Employer-sponsored plans

A good starting point for retirement saving is your employer-sponsored plan. Some employer plans offer you the option to make 401(k) or Roth 403(b). It is very important that if your employer offers to match your plan contributions, you should consider taking full advantage of this opportunity. A 3% or a 5% contribution match by the employer is very common. An employer match will supplement your savings without any extra effort on your part. In other words, it is free money.

There is nothing better than free money.

More ways to save

While employer-sponsored plans and IRAs offer opportunities for retirement savings, they may not be enough to provide the conferrable retirement. Additional personal savings will likely play a critical role in funding your retirement.

Many experts believe that investment portfolio should consist of a combination of Pre-tax account like a IRA or a 401K and an after tax account like a Roth IRA or an Index Universal Life insurance (IUL).

IRA vs. Roth

  • Pre-tax contributions ( IRA). When you make a pre-tax contribution to a retirement plan, you receive a tax benefit right away, but you will have to pay taxes on the money when you withdraw it.
  • Roth contributions. You won’t receive a current tax benefit but qualified distributions are tax-free after reaching 59 ½.

Determining which contribution option to choose depends on your tax bracket now and in retirement. In general, a person in a higher tax bracket who anticipates being in a lower tax bracket at retirement may want to invest in a traditional IRA and, a person in a lower tax bracket who anticipates being in a higher tax bracket in retirement may find a Roth contribution more favorable.

This can be a powerful advantage.

Take the next step

It is important to think about all of the vehicles available as you plan for your retirement. There are other factors to consider as well. So be sure to talk with your financial advisor.

A Total Retirement Solution agent can help identify which accounts are right for you, and allocate investments to each account. As your needs and circumstances change over time, your financial advisor will adjust your plan to help ensure you stay on track.

Take the next step

Speak with a TRS Professional Advisor about your goals