Retirement Investment Strategies At The Age Of 60
Are you fast approaching the age of 60 years and somewhat getting concerned about your retirement plans? It is true many people in a similar position cannot wait to enjoy their free time, rather, it is the small sizes of their retirement accounts that clouds the future with uncertainty.
At the heart of the problem is not a complete lack of money to fund their life activities in retirement, however, there is no denying you need adequate financial strength for your preferred retirement plan.
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We agree worrying does not help. But at the same time, it is worthy to note that no one is too old to make the right decisions on their retirement plan for a better future.
You can trust our professional judgment when we say that just about anyone can willingly adjust their retirement methods at any point of their life regardless of their age. Additionally, we advise our clients to do more than simply put money in a savings account - to hedge their portfolio against market risk by investing the retirement funds in a low-risk assets.
This guide will show you some of the viable and practical investment strategies that you should consider to grow your retirement accounts.
The direction in which the economy flows is not in your power. However, you have control over your money and what you wish to do with it, particularly when it’s about your retirement.
Even with things steadily returning to normal, more or less, you shouldn’t be complacent when it comes to matters concerning your 401(k).
Although we may not have a clear-cut answer for you, we have a very relevant story that depicts how poor planning and irrational thinking can be detrimental to your 401(k) and overall financial stability.
Learn Why Now Is A Better Time Than Ever To Invest In Gold!
IRA are initials that denote “Individual Retirement Accounts.” They are accounts that hold retirement funds, allowing the money to grow without being subjected to taxation. There are three types of IRAs – Roth, Traditional and Rollover. Below is a brief description of each of the three IRAs.
1. Traditional - An individual’s contributions towards a traditional IRA are entitled to tax deductions. The size of this type of IRA continues to grow until the point when the account holder starts withdrawing funds from the account.
2. Rollover – This type of an IRA plan receives funds from a different account and consolidates the funds into your retirement plan. For instance, the funds in your rollover IRA may have come from your workplace retirement plan.
3. Roth – Contributions made towards a Roth IRA are taxed, while withdrawals (in retirement) are tax-free. For the account holder, the strategy is to grow the size of the account without worrying about incurring the tax liabilities during retirement.
The annual savings for an IRA are a great idea for an individual seeking ways to grow their retirement account size. For instance, individuals as old as 50 years can deposit an annual amount of up to $7,000 into their retirement account. IRAs provide a sound plan to grow your retirement savings, while securing your future.
The annual savings towards an IRA enable the account holder to reduce the tax liabilities on their contributions towards the retirement plan, providing your retirement portfolio with significant tax-saving benefits. Additionally, some of these tax-saving benefits are considerably larger for individuals with high levels of income.
The tax-saving aspect of the IRA allows the account holder to save significantly more money for their retirement plan by incurring exceedingly less on tax liabilities on their contributions. As the account holder, the tax deductions will boost your retirement savings even the more.
Another benefit is that the account holder is not obliged to make any withdrawal from the IRA before they clock the age of 70 years. The limit for the account holder putting money in the IRA is set at 70.5 years; only until attainment of that age will the account holder be required to start withdrawing at least the minimal amounts.
On a general outlook, the difference between an age of 60 years and 70 years may seem minimal to the typical investor. Nonetheless, a 10-year timeline is sufficient to grow your savings to quite astounding amounts. For instance, a $200,000-worth of IRA growing at an annual rate of 10% for a period of 10 years will return over $600,000 to the account owner.
Nonetheless, there are other important considerations for the account holder to keep in mind to grow their IRA to its maximum potential. They include:
1. Avoiding to make early withdrawals before elapse of the projected holding period
2. Putting in money into the IRA as much as possible
3. Regularly crediting your IRA with funds
Certainly, and for diverse reasons, it is quite difficult for many people to avoid withdrawing funds from their IRA before getting to 70 years. However, the best way to grow your account is to avoid taking money out of your IRA as much as you can, unless in the event of loss of a job.
It is recommended that the account holder treats their IRA the same way they would care for a fruit-bearing plant: to let it grow to its maturity with minimal disturbance.
Take Advantage of this Investment Strategy
To make the best plans for life in retirement, start by evaluating how your employment service can offer and support 401(k)s. Employers create 401(k)s for their employees to save and grow money for their retirement plans.
Retirement savings plans that closely resemble the account structure of 401(k)s include 457s and 403(b)s. A 401(k) is an employer-sponsored account where part of an employee’s pre-tax salary is withheld and remitted to the retirement account in form of cash contributions. In addition, the funds in a 401 (k) can be invested in bonds or stocks.
Arrangements for the account may allow the employer to match each or the total amount of employee’s contribution towards the account. In most cases, the IRS does not levy any taxes on 401(k)s provided the account holder avoids making any withdraws. As an account holder, your employer will withhold your contribution from your salary before tax treatment.
For the purposes of taxation, 401(k)s are treated in the same way to IRAs. While traditional IRAs are tax-deferred accounts, contributions for Roth IRAs are only completed after tax. Also, it is possible to hold both a traditional and Roth 401 (k), however, it is best to consult a finance professional to help you decide the ideal savings account strategy for you.
Worthy to note, 401(k)s tend to be particularly helpful for individuals aged 50 years. This is because a majority of employees in this age group are likely to have the highest tax rates on their paychecks, and, this account helps them pay considerably lower taxes on their contributions towards the retirement fund.
On the other hands, a Roth 401(k) will have your contributions towards the retirement plan taxed but the withdrawals you make in your retirement will be tax-free. With a Roth 401(k), you will not have to worry about taxation in your retirement.
An employee aged 50 years and above can contribute as much as $19,000 per year, and, additionally, can credit their account with an extra amount of up to $6,500 in what is termed as “catch-up deposit.” If the account holder wishes to contribute a higher amount, then it is advisable they consider setting up an IRA which has lesser restrictions to that regard.
The Golden Rule
Since the outbreak of the pandemic, the United States’ Central Bank has printed more than 75% of the money the country has printed in all of its history. Incredible as that statement may seem, it is the truth. As at last year, the value of the currency printed in that period alone was in the trillions.
As interesting as this issue of money supply may sound, it is important to understand how it affects you. The amount of money printed is astonishingly high, and is indicative of the stark inflation and the dollar devaluing that is looming.
Additionally, people working in the economy have become apprehensive on the policies that guide the activities of the government and the big banks when it comes to taking of deposits and injection of money liquidity into the economy.
Any bad decisions by the major financial institutions in the country including the government has real potential to cause an economic meltdown and completely spin your entire retirement plan out of control.
To hedge against such market downturn, investment in gold has been used as a better option. This is because gold has no direct link to the stock markets or the value of the dollar. In the past, we have witnessed the value of gold go up while the value of the dollar is falling. In the event of inflation, investment in gold provides a safe haven for a large amount of investors’ wealth.
It is a great idea to consider investing part of your asset portfolio in gold, among other forms of investments. Historically, dollar-denominated investments have performed well, nonetheless, dollar-backed investment vehicles should not be your only source of capital growth.
Through proper diversification of your retirement portfolio, you will manage to hedge your assets against loss of value due to inflation or negative market forces that lead to the collapse of the stock markets as in 2008.
A rollover IRA is the ideal type of account if you are going to retire soon, specifically, you should consider gold IRAs. Gold IRAs are a great way to invest your retirement in gold, without having to hold the gold in the physical form of bars and coins.
The need to incorporate a good hedging strategy for your retirement assets cannot be underestimated. Not even the best financial experts can accurately predict when inflationary pressures will occur and how hard they will impact on the economy. Sometimes the impact of an economic downturn may turn out worse than the Great Depression, regardless, the best asset-protection strategy must be proactive with the number one goal, which is to protect wealth.
You can find trustworthy companies out there who are willing to guide you on how to rollover your 401k to an IRA, giving you merits and the demerits of this process based on your specific situation.
Below we provide you with a list of the best 3 firms that will assist you. These three companies have the best reviews in the market, a reliable reputation and are highly-customer oriented approach. They are not in a hurry to close a sale deal, and will take all the sufficient time required to guide you towards making an informed decision.
To find out more, you can visit their site online and request for a free guide for gold investment. Furthermore, you can learn more on rollover process by reading this article on our website. Here is a good article on the topic.