Up & Coming Weekly

May 30, 2023

Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.

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Page 16 of 24

WWW.UPANDCOMINGWEEKLY.COM 16 UCW MAY 31 - JUNE 6, 2023 Christian music station local your MONEY Types of retirement accounts a STAFF REPORT e ability to retire with finan- cial security is a goal for millions of people across the globe. ough people may stop working in retire- ment, many of their existing bills, and even some new ones, will still need to be paid. Retirement is often imag- ined as a time of unbridled financial freedom, but that's only possible when individuals, including young professionals, prioritize planning for the day when they call it quits. Retirement accounts and plans are a popular way to save for life after work- ing. Individuals have various retire- ment plan options at their disposal, and each is unique in its own way. An Individual Retirement Account is a tax-advantaged way to save for re- tirement. Anyone with earned income can open an IRA. Money deposited into an IRA cannot be withdrawn prior to account holders reaching 59.5 years of age without incurring a steep tax penalty of 10%. ere are limits to how much in- dividuals can deposit into an IRA. In addition, there are different types of IRAs, including traditional IRAs, Roth IRAs, Payroll Deduction IRAs, and SIMPLE IRAs. Each has its rules regarding taxes, eligibility and withdrawals, and in- dividuals are urged to discuss which type of IRA is best for them with a financial professional. A 401(k) is another tax-advantaged retirement account typically offered through an employer, though self- employed individuals can enroll in a Solo 401(k) plan. When enrolled in a 401(k) plan, employees will have a portion of each paycheck direct deposited into a long- term investment account. Contributions to a 401(k) are made pre-tax, which saves account holders a considerable sum of money so long as they continue to make contributions. One significant advantage to 401(k) plans is that many employers will match contributions up to a certain percentage. For example, some may match up to 2%, so employees who contribute 2% or more will actually be depositing no less than 4% of their income each week into their 401(k) accounts. Perhaps most beneficial is that em- ployer matches do not count toward the annual 401(k) contribution limits. A Simplified Employee Pension Plan is typically established by a small busi- ness owner or self-employed individ- ual. However, small business owners can set them up for their employees as well. Contributions to an SEP will re- duce taxable income, and the money will grow tax-deferred. Individuals enrolled in an SEP will only pay taxes on the money upon withdrawal. One of the advantages to an SEP is it has significantly higher contribution limits. However, SEPs are employer contribution only, so they rely a lot on employers' available cash. No retirement accounts are the same. Individuals are urged to con- duct their own research and choose the plan that best suits their needs. Improve your financial literacy a STAFF REPORT Financial planning is a key compo- nent of successful money manage- ment. When financial plans are estab- lished and put in place, individuals are in much better position to achieve both short-term goals, like financing a dream vacation, and long-term aspira- tions, like retiring with enough money to live your golden years without worry. No one is born knowing how to handle and manage money. Financial literacy is an acquired skill, which means anyone can learn how to man- age money effectively. e following are a handful of ways individuals from all walks of life can improve their financial literacy. Crack the books (and magazines). A wealth of resources are available to anyone looking to become better at managing money, and many of those resources are books and magazines. Printed works are available for people with varying levels of financial lit- eracy, so it's unlikely that any single text or magazine will benefit everyone equally. Find a text that speaks to your level of literacy and build from there. Pay attention to financial news. e days when financial news was limited to industry insiders or a hand- ful of industry publications are long gone. Various online entities and cable television channels are now exclusive- ly devoted to financial news. Anyone can benefit from paying attention to financial news, which can shed light on investments, real estate and financial industry trends that can help people better understand their portfolios and assets. Read your emails. Adults who already have retirement accounts and other investments may also have an invaluable resource right inside their email inboxes. Investment manage- ment firms like e Vanguard Group, Inc., routinely host online information sessions and discussions for investors that are promoted through email and other lines of communication with account holders. When promotional emails announc- ing these sessions are announced, take note and resolve to participate. Many don't require active participa- tion, but they often provide insight into financial products, markets and strategies to successful investing. Ask questions. It seems simple, but one of the most effective ways to gain greater financial literacy is to ask questions. If you work with a financial planner or are interviewing professionals to help you manage your money, ask that person to explain their financial strategy and the strat- egy espoused by their firms. When a new short- or even long- term goal pops up on your radar, ask your financial advisor to explain ways in which you can achieve that goal. Such discussions can reveal strategies that even well-informed individuals may be unaware of. Financial literacy can help people achieve their life's goals. Various strat- egies can help people from all walks of life improve their financial knowl- edge and take greater control of their finances and futures. Individuals have various retirement plan op- tions, and each is different. ere are a few ways individuals from all walks of life can improve their financial literacy.

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