Colorado Springs Retirement Planning
Colorado Springs retirement planning may include discussing different types of accounts such as 401(k)s, IRAs and Roth IRAs. All retirement accounts have advantages and disadvantages, and it's important to choose what kind is best for you. It depends on your financial situation and your expectations.
There are certain Colorado Springs retirement planning myths that you should let go of when you're ready to begin planning. One popular myth is that there is a particular amount of money that everyone needs to save. Usually, it's a percentage of your current income. The problem with this assumption is that spending is different for everyone during their later years, and you need to make specific calculations based on your retirement plans.
Types of Retirement Accounts
You may want to set up an IRA, a Roth IRA or a 401(k). If your Colorado Springs, CO employer offers a 401(k), that's probably a good place to start. If your Colorado retirement planning company offers a matching 401(k), you should definitely do it! With a matching 401(k), your employer will contribute a certain percentage of what you contribute. It's basically like getting free money.
401(k)s also have higher contribution limits than IRAs, so you can contribute more money. Hopefully, you're beginning your Colorado Springs retirement planning early, and you don't feel rushed. Even so, you may want to put aside a good percentage of your paycheck, which you may not be able to do with an IRA.
Another advantage of a 401(k) is that you can borrow money from it without any penalty (as long as you pay it back). It's better not to pull money from your retirement accounts, but it's nice to have the option in case of emergency. If your Colorado employer doesn't offer a 401(k), though, don't fret: an IRA is also a great account.
IRAs offer more varied investment options than 401(k)s, which is one advantage that they have. So, you will have more investment choices with an IRA, and therefore you may be able to invest for rapid growth or whatever you'd like. With a 401(k), you don't have that many options, and so your investment strategy is more limited.
The advantage of both IRAs and 401(k)s is that your money will grow tax free. So, you have to pay taxes when you take the money out, but it goes into your account tax free and grows that way. With a Roth IRA, though, it works differently. With a Roth IRA you pay taxes when you put the money in, but not when you take it out.
If you're planning on being in a higher tax bracket when you retire in Colorado Springs, CO, you may want to consider a Roth IRA. You can save yourself from a big tax bite if you do! It also makes your Colorado Springs retirement planning easier. Think about it: do you have any idea what taxes will be like at the time you're planning to retire?
Colorado Springs Retirement Myths
When you hear people talk about Colorado Springs retirement planning, you may want to be a little skeptical. If you're listening to a Colorado Springs, CO financial advisor, then you may be able to trust him or her. However, if your friends or family in Colorado Springs, Colorado are passing along advice, be sure you do some of your own research, too.
As mentioned earlier, if you hear that you need a certain amount of money for your Colorado Springs retirement, it's not true. After all, you might be planning to travel a lot during your golden years, or you may want to build your dream house. The necessary savings are different for every individual, and you need to take that into account when you do your Colorado Springs retirement planning.
You may also hear that Colorado Springs retirement planning is all about diversification. In general, planning to diversify your investments is important. However, sometimes that's not the case. In your 401(k), it's best to have bonds, whereas stocks are better in regular accounts. Also, you can have one trustworthy Colorado Springs retirement planning expert help you allocate your funds, and so you don't need to diversify in that sense.
You may also have heard that you need a broker when you're planning your finances and investments. A broker may make investing easier for you, but you don't actually need one. Brokerage fees are costly, so if you want to have a broker help you, be sure you choose a good one!
You may want to go ahead and hire a Colorado Springs retirement planning expert to help you plan your finances during your later years. He or she can help you debunk myths and assess your investments. An expert can make creating a stable foundation for your later years easier.
Retirement Planners In Colorado Springs
Financial Engines Advisors, LLC5134 North Nevada Avenue Suite 140
Colorado Springs, CO 80918
Don Leander, CFP®
Financial Planning Strategies6645 Delmonico Blvd.
Colorado Springs, CO 80919