Retirement Planning 101 Series
Last month we began a series on the importance of reviewing your current retirement planning process , as well as how best to navigate potential changes to your overall plan moving forward . We began by discussing what typically forms the basis for most of our present-day retirement plans , a 401K or 403b employer sponsored Defined Contribution Plan , and how important it is to personally contribute at least the minimum amount from your income to receive your employer ’ s matching contribution to your account .
The next step is to review your investment options within your plan . In most situations , a large percentage of your funds need to be committed to equity ( stock ) investments . This will allow you to take advantage of the long-term returns generated by your ownership in the stocks of companies located both here in the United States , as well as those located throughout the world . While saving , and investing for retirement , equity investments are basically the only way to stay ahead of , or at least mirror , the rate of inflation over long periods of time . This will allow you to retain the future purchasing power of your savings during your retirement years . As retirement age nears , equity exposure should be reduced in the account , incrementally , due to the short-term volatility associated with equity investments .
The most rewarding aspect of a successful employer sponsored retirement plan is to put as much money to work for yourself , as soon as possible , to take advantage of the compounded rate of returns generated by your investments . For calendar year 2017 you can contribute as much as $ 18,000 to your plan ($ 23,000 if you turn 50 years old during the year ). And as the saying goes when it comes to investing , “ it is time in the market , not timing the market ”, so don ’ t get caught up in the day to day gyrations within the stock indexes . We must constantly keep in mind , retirement is a long-term goal and short term goals should always be addressed much differently .
If you are one of the very few of us within the work force that still have some type of a Defined Benefit plan as part of their employment package , consider yourself fortunate and use this time of year to reacquaint yourself with the specifics of your pension plan by getting an up-to-date version of your plan from the human resources department . You can also use the information in the previous paragraph if you also have an employer sponsored Defined Contribution Plan that runs in conjunction with your existing Defined Benefit plan . This combination of plans is common within the current work environment .
Next month we will begin to explore the individual investment vehicles , such as Traditional and Roth IRAs , Medical Savings Accounts , deferred annuities and Solo 401k Plans , etc . that can also be used to build a solid foundation for your overall retirement plan .
“ Your Financial Success is Our Passion ” Please contact Mark for more information , and to also inquire about our one-hour complimentary consultation and a 1 year complimentary subscription to “ Kiplinger ’ s Personal Finance ” magazine . 770.658.9440 - mark @ reaganfinancialplanning . com www . reaganfinancialplanning . com State of Georgia Registered Investment Advisor