Up & Coming Weekly

March 03, 2015

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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16 UCW MARCH 4-10, 2015 WWW.UPANDCOMINGWEEKLY.COM There is no better time than now. Whether you're just starting in the workforce or have been working for years, you need to start planning for retirement and make as much of your retirement as you can tax-free. Proper planning today can save thousands of dollars in unnecessary taxes during retirement. Most financial planners and advice columns con- stantly push that people should be saving as much as they can for retirement because they have the power of time to compound interest. The difference between starting retirement savings at 20 vs. 30-35 could be double the amount down the road. Most people postpone retirement savings, especially if their employer doesn't have a 401(k) or other sponsored plan. For the most part, financial advi- sors agree that people should contribute whatever the employer will match. That's free money. Take advantage of it. Many people see a 401(k) plan as a perfect retirement plan. They put too much money into them because they are not educated on the pitfalls and the tax consequences of these plans. You get to enjoy the benefit of tax-deferred growth; however, they are fully taxable on withdrawals in retire- ment. Many people don't learn how much of a deal this is until it's just too late. It's also considered "provisional income" or what the IRS tracks that could make up to 85 percent of your Social Security income taxable. Other incomes that affect this provisional income calculation are part-time employment income, rental income and municipal bond interest. It's hard to think 30-40 years down the road, but what you are doing today could easily affect how much you pay in taxes then, when you likely will not have the tax deductions that you have today, such as deductions for your children, mortgage interest and the deduction for your qualified plan. So, if you plan the right way, you can make sure that you have the right amount in your 401(k) or future IRA to spin off an income that is under this taxable threshold when combined with a tax stan- dard deduction and personal exemptions, which was $20,000 last year (married) and has histori- cally been adjusted for inflation. Anything over the amount that is to be put into a qualified retirement plan can be used in Roth IRA's and LIRP, or Life Insurance Retirement Plans. Neither of these plans affect taxation of Social Security. Many people are unfamiliar with the LIRP, but it can be life changing. They are customized to your financial plan and goals, and have the tax- deferred growth and tax-free income advantages of the Roth IRA, IAW IR codes 7702 and 70-E. They have additional benefits as well. They can protect income from stock market downturns and in some cases, outperform most stock brokerage accounts, protect assets from lawsuits and probate, increase the value of your estate, provide long- term care, provide illness and disability coverages and even guarantee a lifetime income. They are completely flexible with payments into, and with- drawals out of, with very little of the regulations that surround IRA's. All of this does not come for free, but the fees involved are much less than the costs of fees and taxes from a brokerage account or qualified plan. Remember this, it is not how much money you have in retirement, it is how much money you have after taxes. Start planning now. When to Start Planning for Retirement? by ALAN PORTER ALAN PORTER, Strategic Wealth Tax-Free Retirement Specialist, Contributing Writer. www.iflretirement.com/Alan-Porter . COMMENTS? Editor@upandcomingweekly.com. 910.484.6200. methodist.edu/admissions | 910.630.7000 facebook.com/MethodistUniversity 5400 Ramsey Street, Fayetteville, NC 28311 Enrollment is now open for MU at Night's Spring 2015 Term II semester. Courses are offered for current and visiting students during the day, evening, and online. MU@NIGHT SUMMER SCHOOL Classes start March 16 Session 1 begins May 18 It is never too early to start planning for retirement.

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