Saving For Retirement

February 25, 2012 5:36:45 AM PST
How can you choose a good plan to save up for retirement?Retirement planning sure has changed since our grandparents' time. Social security and a company pension are simply no longer something we can rely on for our future. Joan Jensen, president and CEO of the Central Credit Union of Illinois (https://www.centralcu.org/), came into our ABC7 studio to discuss a few options.

Joan's Tips:

Advantages of 401K Plans and IRAs

  • Tax advantages: your money grows tax-free
  • Contributions through payroll deduction
  • Investment options: stock mutual funds, bond mutual funds, balanced funds, stable value funds, and money market funds

401K

  • Free money if your employer offers matching funds
  • No income limits
  • Higher dollar limits for contributions: most employees can contribute up to $17,000; those 50+ can contribute up to $22,500
  • Loan programs: borrow from your 401K account
  • Rollovers if you leave the company
  • Investment choices

IRA Account

  • Consider if no 401K plan is available, if your employer does not offer a match for 401K funds, or if you have maxed out your 401K match.
  • No matching funds
  • Lower annual contribution limits: maximum $5,000 up to age 50, $6,000 for those 50+
  • More investing options
  • Ease of moving money to other IRA accounts

Roth versus Traditional IRA

  • Current income and tax bracket may limit your options
  • Anticipated tax bracket at retirement
  • Your current age
  • Withdrawal timetable


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