June 2016 | Page 82

you’ll need to save for your future financial independence will depend on other factors, such as when you want to retire and how much you’ll need to live on when you stop working full-time. Armed with this information, you can work with an advisor or use an online retirement calculator to help you determine if you are on track or need to make adjustments. PUT YOUR PLAN INTO ACTION Once you know what you need to save to reach your retirement goal, consider setting up automatic investments into your retirement funds. Most everyone does better with savings when it is set up to happen automatically out of your pay check or savings account. Here are some guidelines on where to allocate your retirement savings, in order of priority. If you or your partner has a 401(k) or similar employersponsored retirement plan available at work, your first retirement planning move should be to do everything you can to contribute the maximum into these plans. Why? Your employer may match your contributions. Plus, the money you put in reduces your taxable income for the year. And any growth of the money will be tax-deferred until you take the money out in retirement. (If your company offers a Roth 401(k), there’s no tax savings now, but when you take the money out during retirement, any investment growth will be tax-free.) The forced savings of 82 | Eydis Magazine an employer-sponsored retirement plan is also, usually, super supportive in helping people hit their goals. Once the money starts being taken out of your paychecks automatically, you’ll probably quickly get accustomed to living without it. If you don’t have a retirement plan through work or your business, or if you do and want to sock away even more money, the next type of account to consider is an IRA (Individual Retirement Account). Think of an IRA as a container that can hold almost any type of investment and allow it to grow, tax-deferred, until you take the money out during retirement. If you are a business owner, beware of the trap of assuming the eventual sale of the business will totally fund your retirement. I hope this happens for you. Most business owners, however, will need to save outside of their business to provide sufficient funds for retirement. GIVE YOURSELF TIME AND BE CONSISTENT For most runners, it would be potentially dangerous to wait until the last minute to prepare for a marathon.