Published Tuesday, December 17, 2013 at: 7:00 AM EST
If you’re in your 20s, 30s, or even 40s, here’s a warning: Don’t count on Social Security benefits to sustain you comfortably through retirement. In fact, you may be better off not relying on Social Security at all.
Consider the aging population. According to the latest data, the average age of Americans is currently 36.7, and that average is edging up 0.2 years each year. With the population growing older, and birth rates falling, the number of people receiving Social Security retirement benefits will continue to increase at a time that fewer young workers will be available to fund the system with payroll deductions.
Whatever steps are taken to address that imbalance, the reality is that future benefits could decrease—and Social Security never was intended to be anyone’s only source of retirement income. With increasing pressure on that system, saving on your own will be more important than ever. And the earlier you begin, the better off you’re likely to be.
If you have a 401(k) plan or another kind of retirement plan at work, that’s usually a good place to start, especially if your employer offers matching contributions. Contact your benefits department to get the ball rolling. You also might consider setting up a Roth IRA on your own. It’s relatively easy to establish such an account, and we can provide whatever assistance you might need.
This article was written by a professional financial journalist for Preferred NY Financial Group,LLC and is not intended as legal or investment advice.
An individual retirement account (IRA) allows individuals to direct pretax incom, up to specific annual limits, toward retirements that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Tranditional IRA. Contributions to the Tranditional IRA may be tax-deductible depending on the taxpayer's income, tax-filling status and other factors. Taxed must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59%, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation.
Contributions to a Roth IRA are not tax deductible and these is no mandatory distribution age. All earnings and principal are tax free if rules and regulations are followed. Eligibility for a Roth account depends on income. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).
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