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Make the Maximum Contribution to Your Retirement Plan & Retire Secure Anthony NM

Now, let's assume you have been contributing only the portion that your employer is willing to match and yet you barely have enough money to get by week to week. Does it still make sense to make non-matched contributions or Roth IRA contributions assuming you do not want to reduce your spending? Maybe. (This article does not address Roth IRA contributions vs. non-matched 401(k) contributions and hereafter only refers to non-matched 401(k) contributions).

Mr. Adrian F. Dodds, CFP®
(915) 544-1100
124 W Castellano Dr
El Paso, TX
Firm
Dodds Wealth Management Group

Data Provided by:
Rebecca R. Setliff, CFP®
(915) 534-9210
4503 N Mesa St
El Paso, TX
Firm
Morgan Stanley Smith Barney
Areas of Specialization
General Financial Planning, Retirement Planning
Key Considerations
Average Net Worth: $500,001 - $1,000,000

Average Income: $100,001 - $250,000

Profession: Not Applicable

Data Provided by:
Dr. Sid Glandon, CFP®
(915) 491-7588
5950 Mira Hermosa
El Paso, TX
Firm
University of Texas at El Paso
Areas of Specialization
Asset Allocation, Business Succession Planning, Comprehensive Financial Planning, General Financial Planning, Investment Management, Investment Planning, Life Transitions
Key Considerations
Average Net Worth: $250,001 - $500,000

Average Income: $100,001 - $250,000

Profession: Not Applicable

Data Provided by:
Mr. Kenneth H. Osborn, CFP®
(915) 760-6898
1262 Frankin Jay lane
El Paso , TX
Firm
Delphi

Data Provided by:
Mr. Peter M. Desantis, CFP®
(915) 564-5906
2501 N Piedras St
El Paso, TX
Firm
Peter DeSantis & Company

Data Provided by:
Mr. Travis J. Hughes, CFP®
(915) 587-7777
5925 Silver Springs, Ste.B
El Paso, TX
Firm
Investors Capital
Areas of Specialization
Comprehensive Financial Planning, Education Planning, Employee and Employer Plan Benefits, Insurance Planning, Retirement Planning, Wealth Management

Data Provided by:
Ms. Helen D. Peck, CFP®
(915) 533-4444
7362 Remcon Cir
El Paso, TX
Firm
Helen D. Peck, CPA
Areas of Specialization
Tax Planning

Data Provided by:
Mr. Jesus A. Longoria, CFP®
(888) 826-4287
7362 Remcon Circle
El Paso, TX
Firm
AMICUS FINANCIAL ADVISORS, LLP
Areas of Specialization
Asset Allocation, Budget Development, Charitable Giving, Comprehensive Financial Planning, Cross-Border Planning, Debt Management, Education Planning

Data Provided by:
Mr. Joshua G. Plasencio, CFP®
(915) 581-1680
5430 Doniphan Dr
El Paso, TX
Firm
First Savings Bank

Data Provided by:
Mr. Michael D Duchouquette, CFP®
(915) 544-5999
419 Executive Center
El Paso, TX
Firm
Duchouquette & Associates, Inc.
Areas of Specialization
Accounting, Asset Allocation, Banking, Budget Development, Business Succession Planning, Charitable Giving, Comprehensive Financial Planning

Data Provided by:
Data Provided by:

Make the Maximum Contribution to Your Retirement Plan & Retire Secure

Provided By: 

Frugal Living

Saving For Retirement: Make the Maximum Contribution to Your Retirement Plan & Retire Secure
By James Lange 
   

Many people perhaps you feel they cannot afford to save for retirement. The truth is you may very well be able to afford to save, but you don t realize it. That's right. I am going to present a rationale to persuade you to contribute more than you think you can afford.

First, I am operating on assumption that you are following the cardinal rule of saving for retirement: If your employer offers a matching contribution to your retirement plan you are contributing whatever your employer is willing to match even if it is only a percentage of your contribution and not a dollar for dollar match.

Now, let's assume you have been contributing only the portion that your employer is willing to match and yet you barely have enough money to get by week to week. Does it still make sense to make non-matched contributions or Roth IRA contributions assuming you do not want to reduce your spending? Maybe. (This article does not address Roth IRA contributions vs. non-matched 401(k) contributions and hereafter only refers to non-matched 401(k) contributions).

If you have substantial savings and maximizing your retirement plan contributions causes your net payroll check to be insufficient to meet your expenses, you should maximize retirement plan contributions.

The shortfall for your living expenses from making increased pre-tax retirement plan contributions should be withdrawn from your savings (money that has already been taxed). Over time this process, i.e., increasing contributions to your retirement plan and funding the shortfall by making after-tax withdrawals from an after-tax account, transfers money from the after-tax environment to the pre-tax environment. Ultimately it results in more money for you and your heirs.

Another way to squeeze blood from a stone is to consider an interest only mortgage. The reduced mortgage payment (in contrast to what you would be paying on a 30-year fixed rate mortgage) is deductible as a home interest expense. The additional cash flow from the reduced payment could be used to pay credit card debt or fund one or more tax favored investments. You could open a Roth IRA, make additional retirement contributions, and/or purchase a tax-favored life insurance plan. In the long run, you could be better off, often by hundreds of thousands of dollars. Of course there are risks with this strategy.

Another opportunity to shift savings from the after-tax environment to tax advantaged retirement savings might arise if you are the beneficiary of an inheritance.

Take this Changing Your IRA and Retirement Plan Strategy after a Windfall or an Inheritance mini case study for example:

Joe always had trouble making ends meet. He did, however, know enough to always contribute to his retirement plan th...

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