Find the right tools for your retirement planDate posted: 10/7/15 06:15:00 AM
Would you attempt to operate your car if the brakes weren't working and the clutch was stuck in second gear? Hopefully not.
The same can be said for those on the winding road leading to retirement. It's important to have all the proper tools in place to live comfortably in your post-employment days, which is why a little bit of careful retirement planning can keep your life moving forward and not stuck in neutral.
What to look for when retirement planning
Taking out an individual retirement account (IRA) can be a great way to help solidify your future financial standing, but with so many options available to consumers, it can be difficult to locate the best one. Wei-Yin Hu, vice president of financial research at the independent investment firm Financial Engines, told U.S. News & World Report that those preparing for retirement should try to choose "the right funds so your exposure to the market is diversified."
Here's a look at two of the pristine retirement savings channels offered by UMB:
"A little bit of careful retirement planning can keep your life moving forward."
1. Roth IRA. This type of retirement savings account is one of the most popular in the nation. Roth IRAs are often chosen by those who start saving for retirement at an early age or plan to hand over funds to their heirs. One reason Roth IRAs are so popular is that they allow money to grow tax-free. CNN Money reported that even at the time of withdrawal, the account holder will pay no taxes. However, the account holder must meet certain income limitations and could face penalties if they choose to withdraw before the age of 59 1/2. To contribute to a Roth IRA, you must make less than $193,000 if you are married and filing jointly, or less than $131,000 if you're single.
2. Traditional IRA. This type of retirement savings vehicle is similar to a Roth IRA but instead asks you to start making withdrawals at the age of 70 1/2. A traditional IRA can balloon much faster than a standard taxable account because dividends, interest payments and capital gains can grow without being hit by taxes. Account holders do still pay taxes, but only when making withdrawals during retirement. Those with an IRA can contribute up to $5,500 per year or $6,500 per year if over the age of 50, according to U.S. News & World Report.
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