Special Savings Plans and Goals

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Presentation transcript:

Special Savings Plans and Goals

Investing for Retirement Pension or 401K plans: company plans that provide retirement income for their workers. A portion is withheld from your paycheck Company matches contribution No Federal tax until you withdraw funds (tax deferred) Maximum Contribution limit $18,000 maximum for an employee in 2016

Individual Pension Plans Keogh plan-retirement plan for self- employed individuals. Can save up to 25% Can deduct that amount from taxable income Maximum contribution limit 25% of compensation or $53,000 in 2016

Individual Retirement Account (IRA) What is a Traditional IRA? Private retirement plan for individuals or married couples Tax-deferred contributions Tax-deferred interest income Maximum contribution limit ($5,500 for people making less than $183,000) The contribution limit for the 2016 tax year is $5,500 for taxpayers under 50 years of age. For people over the age of 50, higher annual contribution limits apply, allowing a contribution of up to $6,500 during the 2016 tax year. the taxpayer would only be eligible to take the full IRA deduction if the annual salary received was under $61,000 if he files as an individual or $98,000 if he files jointly with an eligible spouse. Read more: Traditional IRA Definition | Investopedia http://www.investopedia.com/terms/t/traditionalira.asp#ixzz4Q5WfVEr0 Follow us: Investopedia on Facebook Read more: Traditional IRA Definition | Investopedia http://www.investopedia.com/terms/t/traditionalira.asp#ixzz4Q5WPd7k7 Follow us: Investopedia on Facebook

Roth IRA Retirement plan for individuals or married couples Contributions taxed (disadv.) Interest income never taxed (adv.) Maximum contribution limit ($5,500) Difference between Traditional and Roth IRA

Real Estate Land & Buildings Income Property House (Usually safe) Undeveloped property (usually riskier) Not very liquid – what did liquid mean? Can’t turn it into cash quickly

How much to save and invest? Involves a trade-off! Consider: Risk Tolerance Rate of Return (how much will you get back?) How Liquid is the investment How much income do you make? What are your values?

Spreading out your Investments Diversification-spreading of investments among several different types to lower overall risk Too much risk and poor decisions can lead to bankruptcy for people at high income levels

It is important to diversify your saving and investing, especially when looking toward retirement. In general, the greater the risk involved in any venture, the greater the potential return.