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Make the Maximum Contribution to Your Retirement Plan & Retire Secure Cedar Falls IA

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. Mathew D. Driscoll, CFP®
(319) 266-6270
2302 West 1st Street
Cedar Falls, IA
Firm
Principal Financial Group
Areas of Specialization
Asset Allocation, Business Succession Planning, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Education Planning, Elder Care
Key Considerations
Average Net Worth: Not Applicable

Average Income: Not Applicable

Profession: Not Applicable

Data Provided by:
Mrs. Joyce M. Ankrum, CFP®
(319) 268-4329
2712 Orchard Dr Ste A
Cedar Falls, IA
Firm
AMERIPRISE FINANCIAL SERVICES
Areas of Specialization
Asset Allocation, Budget Development, Charitable Giving, Comprehensive Financial Planning, Debt Management, Divorce Issues, Education Planning

Data Provided by:
Mr. Brian E. Power, CFP®
(319) 277-2020
4807 University Ave.
Cedar Falls, IA
Firm
Ameriprise Financial Advisors
Areas of Specialization
Comprehensive Financial Planning
Key Considerations
Average Net Worth: $500,001 - $1,000,000

Average Income: $50,001 - $100,000

Profession: Not Applicable

Data Provided by:
Angela J. Thoren, CFP®
(319) 277-2020
4807 University Avenue
Cedar Falls, IA
Firm
Ameriprise Financial
Areas of Specialization
Asset Allocation, Charitable Giving, Comprehensive Financial Planning, Debt Management, Education Planning, Elder Care, Employee and Employer Plan Benefits

Data Provided by:
Andrew Fober, CFP®
(319) 268-4334
4600 University Ave
Cedar Falls, IA
Firm
Ameriprise Financial Services, Inc.
Areas of Specialization
Comprehensive Financial Planning, Investment Management, Retirement Income Management, Retirement Planning

Data Provided by:
Mr. Scott J Sernett, CFP®
(319) 235-3356
1025 Technology Pkwy Ste B
Cedar Falls, IA
Firm
Northwestern Mutual Wealth Management Company
Areas of Specialization
Business Succession Planning, Comprehensive Financial Planning, Education Planning, Estate Planning, Insurance Planning, Intergenerational Planning, Investment Management
Key Considerations
Average Net Worth: $5,000,001 or more

Average Income: $250,001 - $500,000

Profession: Self-Employed Business Owners

Data Provided by:
Mr. Steven E. Peters, CFP®
(319) 277-2020
4807 University Ave Ste 101
Cedar Falls, IA
Firm
Ameriprise Financial Services

Data Provided by:
Mr. Daryl F. Kruse, CFP®
(319) 833-1900
2725 Minnetonka Dr
Cedar Falls, IA
Firm
Ameriprise Financial

Data Provided by:
Stephanie L. Arensdorf, CFP®
(319) 268-4334
4600 University Ave
Cedar Falls, IA
Firm
Ameriprise Financial
Areas of Specialization
Comprehensive Financial Planning, Education Planning, Estate Planning, Insurance Planning, Intergenerational Planning, Investment Management, Life Transitions
Key Considerations
Average Net Worth: $500,001 - $1,000,000

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

Profession: Not Applicable

Data Provided by:
Mr. Henry Maidan, CFP®
2712 Orchard Dr Ste A
Cedar Falls, IA
Firm
Ameriprise Financial Services, Inc.
Areas of Specialization
Business Succession Planning, Comprehensive Financial Planning, Education Planning, Estate Planning, General Financial Planning, Insurance Planning, Investment Management

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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