Follow Your Instinct – Start Saving for Retirement Now

A couple sitting together

There it is again – that nagging feeling that you should be setting money aside for retirement. Listen to your intuition and start now! By following some basic guidelines, you’re more likely to achieve financial security.

START NOW. The earlier and more you save, the more your money will grow. Albert Einstein once stated that “Compound Interest” is the strongest force in the universe. He explained that the length of time your money is working for you, compounding, the greater the return. With compounding interest, you earn interest on what you save, as well as on the dividends generated.

There are many different types of retirement savings plans to consider. These include, 401(k) or 403(b) offered by your employer, Solo 401(k), SEP IRA, Simple IRA, Traditional IRA, Roth IRA and a Health savings account.

Chaffey FCU provides Traditional and Roth IRAs, which provide a safe way to save for retirement while earning competitive market interest rates. There are two great benefits of an IRA: you may be able to deduct your contributions in whole or in part early, depending on your circumstances, and earnings are generally not taxed until you take a distribution.

Traditional IRA

You can contribute up to $6,000 a year to an IRA ($7,000 if you’re 50 or older). The money grows tax- deferred until you take withdrawals. You can contribute to both an IRA and a 401(k), but if you’re covered by a retirement plan at work, you can’t deduct your IRA contributions from your taxable income if you earn more than $74,000 (for single filers) or $123,000 (married filing jointly) in 2019. After earning $64,000 and $103,000, respectively, you get only a partial deduction. If you’re not covered by a retirement plan at work, you get the full deduction no matter what your income, unless you file jointly with a spouse who has a retirement plan at work.

Roth IRA

With a Roth IRA, you are contributing after-tax dollars, and you get no tax deduction for your contribution. However, the money you earn grows tax-free, and you pay no tax on withdrawals after you reach age 59 1/2. Plus, unlike traditional IRAs, there are no mandatory withdrawals after age 70 1/2. You can also withdraw the amount you contributed (but not your investment earnings) at any time with no penalty and no taxes due, which is not the case with traditional IRAs. To contribute to a Roth IRA, you must make less than $137,000 (if you’re single) or $203,000 (if you’re married filing jointly) in 2019. If your income is more than $122,000 (single) or $193,000 (married filing jointly), your allowed contribution is reduced. You can contribute to both a Roth IRA and a traditional IRA, but the contribution limits apply to your total deposits.

At Chaffey, we’re committed to your financial success so we strive to make the process as easy as possible. Our investment representatives will provide you with unbiased information to help you reach your goals. We’ll explain investment choices, discuss risks and propose a strategy that is appropriate for you. To learn more or to start your own IRA, call 909-986-4552 or stop by one of our branches!

Anisa Agulto