Oklahoma City elder law attorneys can assist you in creating a financial plan aimed at providing a secure retirement. Unfortunately, most Americans are financially ill-prepared for retirement.
In fact, Investopedia indicates that the average 30-year-old should have a year’s salary saved for retirement. However, the reality is that most 30-year-olds have well below a year’s salary saved for retirement. By the time people are in their 40’s, they are often “dangerously behind,” according to Investopedia. Specifically, most 40-year-olds have only saved $63,000, but should have three times their salary set aside for retirement.
Two reasons why people have not saved enough are (1) they do not understand how to effectively plan for retirement and (2) they are not making use of tax-advantaged plans, such as Individual Retirement Accounts (IRAs).
IRAs are a powerful tool that can help you to jump-start your retirement savings by giving you a big tax break. Parman & Easterday can help you to understand the applicable IRA rules and answer questions about IRA investing, including whether you should start investing in an IRA while you are young.
Can You Invest In An IRA When You’re Young?
When you begin looking into your investment options for retirement, you should be aware that the amount you can invest in an IRAs varies based on your age. Specifically, you are allowed to invest in an IRA up to a maximum $5,500 annually if you are under the age of 50 and up to a maximum of $6,500 annually if you are over the age of 50.
Traditional IRAs are funded with pre-tax money. Roth-IRAs, however, are funded with after-tax dollars and withdrawals are tax-free and enjoy tax-free growth.
It is important to start funding your IRA when you are young because each year you don’t take the tax deduction by putting money into an IRA, you lose the benefit of those tax breaks. Further, there are no catch up provisions for years in which you don’t fund your IRA; you simply forfeit the tax benefit if left unclaimed. You should also invest when you are young because your income generally increases over time. Once your income reaches a certain level, you may be disqualified from making additional contributions to your IRAs. Therefore, you want to take advantage of the tax breaks available to you while you are still qualified.
Finally, you should begin investing in an IRA when you are young in order to take advantage of compound interest. The longer you let your money grow, the sooner you can begin to make additional money on your investment gains.
The younger you take advantage of IRA contributions and compound interest, the easier it will be for you to amass enough wealth to retire with financial security. On the other hand, if you put off investing until you are older, you will have to put aside a substantial amount of money to catch up on time you missed (something that may be impossible because your money will have missed decades of potential growth).
Getting Help From Oklahoma City Elder Law Attorneys
Oklahoma City elder law attorneys can provide personalized one-on-one advice with the creation of your retirement plan. We will help you determine if a traditional or Roth IRA is right for you. We can also provide guidance on what your best retirement savings options are while keeping your assets safe from potential loss.
To find out more about how elder law attorneys can help with the retirement planning process, join us for a free seminar. You can also give us a call today at (405) 843-6100 or (913) 385-9400 or contact us online to get personalized help creating your retirement plans. Call now to get started. Do not wait too long and make it harder to achieve your retirement savings goals.