One of the main reasons why retirement accounts are so beneficial is the power of tax deferral. In a tax-deferred investment vehicle, such as a 401(k) plan or an IRA, your earnings are not taxed until you begin withdrawing money from your account in retirement. Consider the image. A hypothetical value of $10,000 is invested in both a taxable and a tax-deferred account. The difference in value between the two accounts becomes quite substantial after 20+ years. For investors with a long investment horizon, a tax-deferred portfolio is an excellent choice.
Please keep in mind that once you begin to withdraw money from your retirement account, you will be taxed accordingly. However, since you will most likely earn less in retirement, withdrawals from a deferred portfolio may be taxed at a lower rate.
Do you miss receiving your social security benefits statement? If you recall, the Social Security Administration used to mail annual statements to you, but suspended this service back in 2011. Last month, the SSA announced that workers age 18 and older can now access their Social Security Benefit statements online. “Our new online Social Security statement is simple, easy-to-use, and provides people with estimates they can use to plan for their retirement,” says Michael Astrue, Commissioner of Social Security. This is a terrific financial planning tool because you can also view estimates for disability and survivor benefits. 
A fresh new year is a great time to up your contributions to a retirement plan. Some limitations have changed for 2012 and it is important for everyone that wants to do the maximum contributions to up their contributions in order to do just that. Contact us today if you have any questions on your limits or your current retirement plan options.
September 9th is National 401(k) Day! This day is an annual celebration to promote the importance of participation in employer-sponsored profit sharing and 401(k) plans. Ignoring these plans should not be an option! Do you stop for a coffee everyday? Put that money towards your retirement instead! Would you like to reduce your income taxes? Participate in the retirement plan and do just that as the contributions are deducted before your taxes are calculated (except for Social Security taxes). Does your employer offer a match? If the answer is yes, realize you are throwing free money away by not participating! Do you have an old 401(k) from a previous employer? Most employers allow you to roll your 401(k) balance into their plan and if they do not, you can open an IRA to capture those assets. 
