"Choose the Best Retirement Plan for Your Retirement Needs"
By Betty Harrison of AG Edwards and Sons, Inc. Member SIPC

Saving for retirement used to be simple. Your company funded your pension plan and you and your fellow workers financed Social Security. Today things are different. You need a plan that covers how you expect to supplement your pension, if any, and Social Security so you can enjoy a comfortable retirement.

You might use any number of strategies to get where you need to be financially, but one piece of advice is standard. Your plans should include Individual Retirement Accounts, which offer significant tax advantages to help you get more from your retirement savings. If you plan to use IRA’s during your savings years, there are a number of decisions to be made. One of the first decisions is determining what type of IRA to choose.

To help you decide between a traditional IRA and a Roth IRA, there are several factors to consider. The primary choice is between annual tax-deductible contributions to a traditional IRA or non-deductible contributions to a Roth IRA . Before deciding, you should consider how soon you’ll need access to your savings.

If you make withdrawals before age 59-1/2 from traditional IRA’s, you’ll have to pay ordinary income taxes and possibly a 10 percent IRS penalty. So, in this case, the tax-and-penalty-free access to Roth IRA contributions may be more desirable.

Another factor to consider is whether you think your tax bracket at retirement will be lower or higher than it is now. If you think you’ll be in a higher tax bracket, you may want to consider a Roth IRA because you’ll be able to withdraw money tax-free.

However, it’s important to note the difference between tax-deferred and tax-free growth. With tax deferral, taxes are owed only when money is withdrawn from the account.

A traditional IRA offers the potential for tax-deferred growth - you make pre-tax contributions and only pay income taxes when you take withdrawals. Tax-free growth means you do not pay taxes on your earnings. , Any growth on the after-tax dollars you invest in a Roth IRA can be withdrawn free of income tax as long as you follow certain rules governing these types of accounts.

Traditional and Roth IRA’s each have distinct eligibility requirements and advantages. Keep in mind that you have unique financial needs that probably make one kind of IRA better for your situation.

Regardless of which IRA you choose, you’ll want to make sure and get your retirement savings plan off to a good start. The first thing to do is set your goals and begin contributing to your IRA right away. Take advantage of time by funding your IRA early in the year. IRA contributions must be made by your tax-filing deadline, usually April 15. Also, you may want to consider funding your IRA throughout the year. You can have a specified amount taken out of your checking account monthly. For example, if you save $250 per month, you’ll reach the $3,000 annual maximum contribution and be well on your way to a solid retirement plan.

MAGGIE SAYS: Clients of BETTY HARRISON feel very confident that their investments are monitored with great care. With every new client, Betty takes her time getting to know the individual, their situation, and their goals. Betty's continued communication with her clients is an important factor in these relationships.

Whether you are just starting to think about investing, are an experienced investor, or somewhere in between, call
BETTY HARRISON at 410-548-5400.