On Time, Tax Benefits, On Target, UnTouchable

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About Steve Kerby

Steve Kerby is a lifetime resident of Oregon, having graduated from Southern Oregon University, where he majored in business. Throughout his 49 years in the financial services industry, Steve has maintained the most professional approach to each of his client’s needs. His background is extensive and based on helping people save money on taxes and making sure money set aside for retirement is safe and secure. If there is one asset that Steve exhibits, it is his ability to “listen.” Steve knows how important it is to understand each client’s goals and ambitions and to match them up with the best possible financial planning options.

Making contributions to a traditional or Roth IRA dramatically increases your ability to build a bigger nest egg, especially if your employer matches contributions. You want to take advantage of this “free money.” Steve Kerby

Are you participating in your employer’s 401k or IRA plan? If not, you may be missing out on the opportunity to avoid running out of money when you no longer work. This is especially true now that the “Setting Every Community Up for Retirement Enhancement (SECURE) Act became law at the beginning of 2020.

Bureau of Labor Statistics research indicates that only about 56% of eligible workers participate in a retirement plan offered by their employer in any given year. That’s troubling, especially when you consider that people tend to vastly underestimate how much money they will need once they no longer bring in a paycheck.

4 Reasons you need to enroll in your employer’s plan right now.

  • Tax benefits: Both traditional IRAs and 401(k) plans offer tax-deferred retirement savings. Talk to your tax expert about your situation. You might qualify to get a deduction for your contributions to a 401(k) or IRA. After you retire, distributions to these accounts are taxed as income for the year they are taken. Contributions are subject to IRS limits. Contributions to these kinds of accounts are made with after-tax dollars, with distributions after age 59½ being tax-free. Roth IRA contributions come from after-tax money, and potential earnings grow tax-free. With a Roth, you can also withdraw contributions any time you want, without additional taxes or penalties.
  • Your plan is unTouchable: Yes, there are exceptions. But in general, employer plans are an “out-of-sight, out-of-mind” proposition. Because money comes directly out of your paycheck and goes into your retirement account, you won’t have to think about saving.
  • Your plan is “on Time.” You can’t keep retirement funds in an account forever. If you attain age 70 on July 1, 2019, or later, you will have to take withdrawals starting at age 72, whether you need the cash or not. But, waiting as long as possible to access plan money can add up to THOUSANDS of extra dollars in retirement.
  • Employer plans can help you get on Target. Most Americans seriously underestimate the amount of money they will need when they retire. Adding a powerful income stream generated by an employer plan will go a long way toward helping you avoid running out of money when you retire.

Take advantage of the “Rule of 72” and the magic of compound interest.

The Rule of 72 calculates how long it will take your money to double given a specific rate of interest. Compound interest helps your nest egg grow faster because interest calculations are made on the accumulated interest over time and your original principle. Compounding creates a kind of snowball effect because your original investment and the income you get from that investment grow together. Even if you get a late start with your employer plan, your contributions still have a chance to experience incredible growth due to the magic of compounding.

Are you worried about the safety of employer plans?

Many Americans worry about the solvency of employer plans and market risk, along with the lack of diversification inherent in such programs. As they age, some employees want to move their money out of mutual funds and into safer vehicles, such as annuities. Before the SECURE Act, employers were hesitant to offer annuities due to liability concerns. Few employers included an annuity option.

With the SECURE Act, the government has eased the way for in-plan annuities designed to enhance retirement security. SECURE has removed many liability concerns and increased portability for annuity investments, making them a more viable option. Check with your employer about whether they currently offer annuities or plan to do so in the future. Also, talk to your trusted advisor to learn more about the annuity product and how it can enhance your retirement security.

To sum it up, 401(k) and IRA plans are a powerful way for working Americans to create additional income streams in retirement. They are tax-deferred (or tax-free) and set up in a way that makes it difficult to touch them before you retire. With greater flexibility and plan choices than ever before, 401(k) plans can ensure that you have safety, predictability, and more cash in your pockets when you leave the workforce.

About Steve Kerby

Steve Kerby is a lifetime resident of Oregon, having graduated from Southern Oregon University, where he majored in business. Throughout his 49 years in the financial services industry, Steve has maintained the most professional approach to each of his client’s needs. His background is extensive and based on helping people save money on taxes and making sure money set aside for retirement is safe and secure. If there is one asset that Steve exhibits, it is his ability to “listen.” Steve knows how important it is to understand each client’s goals and ambitions and to match them up with the best possible financial planning options.

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Content in our posted articles is deemed to be accurate but topics, facts and laws can change. It is always a good idea to verify facts before making decisions. Always seek authorized and professional advice regarding financial decisions which includes investing, annuity purchases, tax planning, changes in a financial portfolio and retirement planning.

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