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Make the Maximum Contribution to Your Retirement Plan & Retire Secure Lees Summit MO

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).

Kristine McKinley
Beacon Financial Advisors, LLC
(816) 739-4853
200 NE Missouri Rd, Ste 200
Lees Summit, MO
Expertises
Newlyweds & Novice Investors, Cash Flow/Budgets/Credit Issues, Middle Income Client Needs, Retirement Planning & Distribution Rules, Tax Planning
Certifications
NAPFA Registered Financial Advisor, CFP®, CPA

Samuel Scott
Sunrise Advisors
(913) 681-0215
13401 Mission Road, Suite 201
Leawood, KS
Expertises
Ongoing Investment Management, Retirement Planning & Distribution Rules, Planning Issues for Business Owners, Retirement Plan Investment Advice, Estate & Generational Planning Issues
Certifications
NAPFA Registered Financial Advisor, CFP®

Matthew Davis
Davis Financial Management, Inc.
(913) 890-7279
4901 W. 136th Street
Leawood, KS
Expertises
Retirement Planning & Distribution Rules, Ongoing Investment Management, Tax Planning, Planning Issues for Business Owners, Retirement Plan Investment Advice
Certifications
NAPFA Registered Financial Advisor, CFP®, CPA/PFS

Dean Cherpitel
Legacy Wealth Planning, LLC
(913) 648-4668
5750 W. 95th Street, Suite 128
Overland Park, KS
Expertises
Ongoing Investment Management, Retirement Planning & Distribution Rules
Certifications
NAPFA Registered Financial Advisor, BA, ChFc

Lynn Garrison
Legacy Wealth Partners, LLC
(913) 338-4530
11011 King Street
Overland Park, KS
Expertises
Helping Clients Identify & Achieve Goals, Ongoing Investment Management, Financial Issues Between Generations, Estate & Generational Planning Issues, Charitable Giving - Trusts & Foundations, Alternative or Private Investments
Certifications
NAPFA Registered Financial Advisor, BSEE, CFP®

Sandi Weaver
Financial Security Advisors, Inc.
(913) 385-5523
8340 Mission Road, Suite 113
Prairie Village, KS
Expertises
Ongoing Investment Management, Retirement Planning & Distribution Rules, Tax Planning, Middle Income Client Needs, Planning Issues for Business Owners, Retirement Plan Investment Advice
Certifications
NAPFA Registered Financial Advisor, CFA, CFP®, CPA

G. Douglas Dunham
Dunham & Associates Financial Planning LLC
(913) 338-3435
5208 West 148 Street
Leawood, KS
Expertises
Ongoing Investment Management, Middle Income Client Needs, Retirement Planning & Distribution Rules
Certifications
NAPFA Registered Financial Advisor, BA, BS, CFP®, CMFC, MBA

John Seitzer
Everest Wealth Management
(913) 387-2017
4901 W. 136 Street, Suite 1
Leawood, KS
Expertises
Ongoing Investment Management, Alternative or Private Investments, High Net Worth Client Needs, Retirement Planning & Distribution Rules, Tax Planning, Estate & Generational Planning Issues
Certifications
NAPFA Registered Financial Advisor, CFA, CFP®, CPA, MBA

Samantha Kopek
GTrust
(913) 451-0900
11225 College Boulevard, Suite 410
Overland Park, KS
Expertises
Helping Clients Identify & Achieve Goals, Middle Income Client Needs, Ongoing Investment Management, Retirement Planning & Distribution Rules, Tax Planning, College/Education Planning
Certifications
NAPFA Registered Financial Advisor, CFP®, EA

Richard Salmen
GTrust
(913) 451-0900
11225 College Boulevard, Suite 410
Overland Park, KS
Expertises
Helping Clients Identify & Achieve Goals, Middle Income Client Needs, Tax Planning, Estate & Generational Planning Issues, Planning Issues for Unmarried & Same-Sex Couples
Certifications
NAPFA Registered Financial Advisor, CFA, CFP®, CTFA, EA, MBA

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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