Did You Know That Retirement Plans Can Cut Your Taxes?

How many people do you see working at Walmart, McDonald’s, or any other business that are in their late 60’s, 70’s, and even early 80’s that should be enjoying their Golden Years? Problem is they no longer have the Gold to enjoy. Ongoing medical costs, reductions in their 401k plans, gas taking 4%-7% of a person’s annual income, and other unforeseen incidents chip away at our nest eggs.

The number of people below 65 that claimed benefits stood at 42 percent in 2009. This figure went up from 38 percent in 2007 based on the research of economists at Washington D.C.’s Brookings Institution.

Retirement planning can be a long and arduous process and may require a lot of research and analysis. But this process can be simplified by opting for some simple measures early on in one’s career. You may know that you cannot totally depend on the pension plans that the government and public sector employers may have. Many a times one does not receive their pension or other times its not sufficient for one’s needs. Moreover if you have been self-employed all your life or worked in a private sector, then you will have to figure out the post retirement financial plans for yourself. After all your source of income would be absent while still having the expenses.

You can invest your retirement funds in any of these options and get higher returns. That said – I need to share whatever I know about the latest market trends to help you make a decision.

While you may think you have saved enough, here are some statistics that may make you think otherwise. More than 50% of workers in their 30s have employee benefits packages birmingham al that have a value of $17,000. When they reach their 40s, 60% or workers have accounts with a $40,000 value. After the age of 55, most people have less than $100,000 in a retirement account. These savings are far from adequate, especially when you consider that you will be withdrawing 4 to 5% of the amount each year when you retire. To make matters worse, most retired individuals receive most of their income from Social Security, which averages at $1,150 per month. That is barely enough to live on.

This is an important topic because many working adults are planning to retire, eventually. Most of them had no idea how it will play out when they retire. They feel by contributing at the place of employment they will be AOK at retirement. Think again. Let’s think about it. Why would the government give you a tax break this year to help you save? Answer: to tax you later when taxes are higher. Have you ever sat down and done the math on what the short term savings will mean in retirement?

Income from a business is one realistic way that you can add to your income portfolio. You would learn a lot from watching Shark Tank and see how successful people think and what they focus on to help other people and how they add to their business holdings in order to increase their money earning potential. There are many types of businesses out there and you should focus on something that you enjoy and produces a great return on your investment.

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