Retirement

by | Jun 22, 2020

There are many ways to prepare for retirement. Most experts say that to maintain the

same standard of living, your retirement income should be about 80% of your final

pre-retirement salary.

Two common ways to save for retirement are a 401(K) and an IRA. You can have both of these accounts. These are tax deferred accounts. This means that you only pay taxes on what you withdraw after retirement. Since your income often drops after you retire, you move down to a lower tax bracket and will be taxed at a lower rate for your money than you would have been while fully employed. However, if you want to take money out of your 401(k), 403(b), or other retirement account before you’re 59-and-a-half, you will have to pay a 10% penalty.

Oftentimes, employers will match contributions to a 401(K). This is called employer

matching. For employees to receive money from their employer, the employee must first make

a contribution. The employer will then match that contribution up to a certain limit.

Workers who have paid into Social Security are eligible to receive benefits when they

retire, meaning they will receive money from the government every month. The amount they

receive depends on their average earnings when they were working.

There are other sources of income in retirement as well, like pension plans from

employers, or annuities, which pay out a fixed sum of money over time.

Commonly, people will invest money for retirement. This is a good idea because the

stock market will compound money, meaning that it will allow money to grow large if allowed to

sit for a long time.

Get paid to learn financial literacy

Recent Posts

3 myths about young people and credit unions

3 myths about young people and credit unions

Since the beginning of time, older generations have been claiming that “kids these days” are somehow in worse shape than their elders ever were — don’t let your credit union fall into that same dismissive mindset.

What is a “zillennial” anyway?

What is a “zillennial” anyway?

Gen Zers and millennials are trading insults on the internet these days — this one goes out to all the twenty-somethings caught in the middle.

Spending III

Spending & Saving Spending - Article 3Wealth BuildingBudgeting and developing smart spending...

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *