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Make the Maximum Contribution to Your Retirement Plan & Retire Secure North Kingstown RI

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).

Rebecca Preston
Preston Financial Planning
(401) 421-1777
251 Olney Street
Providence, RI
Expertises
Middle Income Client Needs, Women's Financial Planning Issues
Certifications
NAPFA Registered Financial Advisor, CFP®

Ms. Maryanne P. Cunningham, CFP®
(401) 783-8647
18 Wayside Ct
Kingston, RI
Firm
Bank On Mac
Areas of Specialization
Asset Allocation, Comprehensive Financial Planning, Debt Management, Education Planning, Employee and Employer Plan Benefits, LGBT Individuals and Couples, Life Planning

Data Provided by:
Mr. Stuart F. Latessa, CFP®
(401) 626-1039
821 Main St
East Greenwich, RI
Firm
Citizens Investment Services
Areas of Specialization
Asset Allocation, Education Planning, Elder Care, Employee and Employer Plan Benefits, Estate Planning, General Financial Planning, Insurance Planning
Key Considerations
Average Net Worth: Not Applicable

Average Income: Not Applicable

Profession: Not Applicable

Data Provided by:
Ms. Denise L. Roberts, CFP®
(401) 845-3504
284 Bellevue Ave
Newport, RI
Firm
Morgan Stanley Smith Barney

Data Provided by:
Raymond E Berberick Jr., CFP®
(401) 682-2007
1016 East Main Rd.
Portsmouth, RI
Firm
Edward Jones

Data Provided by:
Mr. Robert A. Petrucelli, CFP®
(401) 667-7334
420 Scrabbletown Road
North Kingstown, RI
Firm
Robert Petrucelli, CPA
Areas of Specialization
Accounting, Comprehensive Financial Planning, Estate Planning, General Financial Planning, Small Business Planning, Tax Planning, Tax Preparation
Key Considerations
Average Net Worth: $250,001 - $500,000

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

Profession: Not Applicable

Data Provided by:
Mr. Mark S. Buckley, CFP®
(401) 467-6800
511 Green Bush Road
East Greenwich, RI
Firm
Law Office Of Mark S. Buckley
Areas of Specialization
Budget Development, Debt Management, Estate Planning, Legal Advice

Data Provided by:
Mr. Daniel Gerard Corrigan, CFP®
(401) 849-9313
747 Aquidneck Ave
Middletown, RI
Firm
Corrigan Financial Inc
Areas of Specialization
Comprehensive Financial Planning

Data Provided by:
Mr. Baxter Smith Jr., CFP®
(401) 848-0380
372 Broadway
Newport, RI
Firm
Ameriprise Financail

Data Provided by:
Mr. Terrence Gavan, CFP®
(401) 847-1260
18 Phelps Rd
Middletown, RI
Firm
T. GAVAN, CPA, CFP
Areas of Specialization
Accounting, Asset Allocation, Budget Development, Comprehensive Financial Planning, Debt Management, Education Planning, General 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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