IRA Rollover as Retirement Plan
When it comes to thinking about retirement, many Americans would rather not. With the problems with the Social Security system, the two current working generations can’t help but wonder if there will be any retirement for them. With all the emotion that surrounds aging as well as money, retirement and retirement planning is a difficult and charged topic for many people.
Retirement planning, however, does not have to be a big deal. It can be as simple as setting up an individual retirement account with a monthly automated withdrawal from your paycheck or bank account. Unless you are self-employed, or work for a very small company, you should have access to a 401(k) account. If you are self-employed, a self-directed IRA is an available option for you. Depending on your age and your income, retirement planning could be as simple as making sure you put $100 into one of these retirement accounts with every paycheck. If you have a good salary, and make more than $40,000 a year, you should be doing more serious savings. If you’re over age 45, no matter your income, you should be investing more than simply $100 or $200 each month. Why is that? Because you don’t have as much time for your investments to grow compared to a worker of, say age 25. 
You need to grow your retirement nest egg as quickly as you can and as safely as you can.
Another important piece of retirement planning and money management, is understanding the flexibility you have within these accounts. Just because you set up a 401(k) with your employer does not mean that you can never leave that employer or you’re always stuck in that 401(k) account. A 401k rollover is always an option when you change jobs. You can consider rolling the 401(k) funds to an IRA instead of to another 401(k). An IRA rollover is a very simple process.
In the realm of individual retirement accounts you even have more flexibility. You can consider a Roth IRA or a traditional IRA. What you get with a Roth IRA account is retirement fund which grows with post-tax dollars. For this reason, many people like to have both the Roth and a Traditional IRA or 401(k) account. You can find any number of articles that pit Roth IRA vs traditional IRA in terms of return on investments and tax shelter abilities. The reason that I suggest having both kinds of accounts has to do with your taxes. Successfully planning for taxes during retirement is a weak spot for many people. The average retiree underestimates the tax burden but they will have during retirement. By having some of your retirement money grow post-tax you can mitigate some of the concerns around taxes.
Only you can decide how much money are going to need for retirement. Certainly everyone has to pay taxes, but how much money we need for medical expenses? What you want to travel? Or open your own business? Once you’ve answered these questions, you’re going to have a better sense of how much money you should be saving now in order to pay for your tomorrow.
