Whether you haven't started saving for retirement—or simply haven’t saved enough—don’t get discouraged! The adage is true: it’s never too late to begin saving or to save more. Even if you can only put a small amount away each month in a qualified retirement plan account, like a 401(k) or IRA, consider doing so now. The sooner you start, the sooner you can put the power of tax-deferred compounding to work for you.
Let’s say you begin contributing $200 per month to a retirement account where earnings grow on a tax-deferred basis. Assuming an annual investment return of 8%, the value of your savings in a tax-deferred account will potentially grow to $34,768 after 10 years, compared to $31,753 in a taxable account.* That’s an additional $3,015 you don’t have to contribute! If you increase your monthly savings amount over time, your retirement assets have an opportunity to really add up.
If you'd like to learn more about planning for retirement or other important milestones in your life, contact Anne Simpson (Anne.Simpson@odyssepfa.com) to talk.
*The lump sum shown after taxes is based on a 24% marginal tax rate and doesn’t take into account the possible change in tax bracket that might occur due to a lump sum distribution of the taxable amount, nor does it take into effect any applicable tax penalties. This hypothetical investment result is for illustrative purposes only and should not be deemed a representation of past or future results. Actual investment results may be more or less than those shown. This does not represent any specific product. This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.