Retirement Investing

Retirement Investing


Investing for retirement may be one of the most important events that will take place in your life. In order to prepare for retirement and determine what types of investments can be helpful for your situation, you must first determine several things.

  • When do you plan to retire?
  • Will you work part time during retirement, and if so, how much income from work can you see yourself earning?
  • What age will you be when you retire and will you be receiving a pension, social security, or both?
  • How much income do you expect to live on and how long will your income last?
  • How much do you have saved for retirement and how is it invested now?
  • Will you be selling your home or moving to a new one at retirement?

We believe retirement investing requires answers to specific questions like these in order to be effective in selecting among the most appropriate investments for retirement.

Tools to use for Retirement Investing

Traditional IRA

A Traditional IRA is a tax-deferred retirement savings plan. This type of investment allows you to make yearly contributions with money that may be deductible on your tax return. Any earnings can grow tax-deferred until you withdraw them during retirement. Having the ability to defer taxes means all of your dividends, interest payments and capital gains can compound each year without being hindered by taxes.

Many retirees also find themselves in a lower tax bracket during retirement than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.

EARLY WITHDRAWAL:  If you choose to withdraw money and you are under 59 1/2, you will be faced with a 10% IRS withholding on the Federal Level.  And potentially, state and local taxes as well.

Roth IRA

A Roth IRA is a retirement savings plan that allows the plan owner to contribute after-tax dollars, and cultivate those funds through investments on a tax-free basis. Funds in a Roth IRA may be invested in stocks, bonds, mutual funds, annuities and, in some specific cases, real estate. They can also be purchased from banks, so that the underlying investments would be standard banking products such as CDs and bank money markets. When the plan owner wishes to retrieve funds from the plan in retirement, he or she is not taxed at the time of a qualified distribution. This is the primary difference between a Roth IRA and a traditional IRA. Traditional IRAs are taxed at the time of distribution, rather than at the time of contribution. In addition, Roth IRAs are not subject to required minimum distributions.

To qualify for the tax free penalty free withdrawal of earnings, a Roth IRA must be in place for at least 5 tax years, and the distribution must take place after age 59 1/2 or due to death, disability, or a first time home purchase (up to $10,000 lifetime maximum).  Before taking any specific action, be sure to consult with your tax professional.


Contact us to set up a meeting to discuss your individual needs.  Phone 707-446-7623,