Planning Briefs

Should You Work Longer Or Save More For Retirement?

Published Wednesday, September 16, 2015 at: 7:00 AM EDT

According to a new survey reported on by Forbes magazine, many people facing a retirement income gap have a simple solution: They plan to keep working past the traditional retirement age of 65. But that is easier said than done and often isn't the best approach.

More than 60% of the adults surveyed who expect to work beyond age 65 cited financial reasons. They point to insufficient savings and a lack of confidence in the Social Security system. But if you plan to keep plugging away at your job well into your sixties, recognize that your health, energy, and employability likely won't be as great as they are in your thirties, forties, or fifties.

Furthermore, your expectations may not be realistic. Research has shown that about half of retirees actually call it quits before age 60.

What can you do? Consider these three modest steps:

1. Develop a clear picture of your retirement income. Rely on professional assistance for an analysis of what you can reasonably count on.

2. Do more to save now. That could mean boosting your annual 401(k) or IRA contributions in lieu of buying a more expensive car or taking a nicer vacation.

3. Make retirement saving your top priority. Even if your kids will be heading off to college, retirement planning can't take a back seat.

We can help you devise a long-term plan designed to meet your goals.

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).