The Tax Goddess Blog

Retirement Options - TALK TO YOUR FINANCIAL PLANNER (OR HIRE ONE!)

If you don't have a financial planner (or even a plan!) now is the time to get one.  Many people, especially those who are young, put off retirement planning because they believe that someone else will take care of them (social security - which I believe will be long gone before we get there (the 20-30 somethings)) or that they will save money later,....

It never fails to amaze me how if you put just a dollar a day away now (or even stop drinking starbucks everyday and maybe just 6 days a week!) how much that could translate to in 30 years when you are ready to retire.  (Millions if you do it right, and I hope you realize that is what you are going to NEED in order to live in the future - millions to pay the electric bills, and mortgages, etc.!)

I believe FIRMLY that every one needs a financial planner.  Everyone needs a specialist who knows this stuff and can help you organize for the best and brightest future,....

INTERVIEW people, lots of people.  Ask them questions.  Are they interactive?  Or are you going to find yourself, 20 years later, no more in the bank, and some "financial planner" who has done nothing for you and hasn't called you in years (except to remind you that you need to pay a fee to update your account each year!)

Anyway - enough with the rant.  I just want people to think about it.  I know everyone says think about it, but do you really want to be the transient walking on the streets at 70 who no one helps and you were earning 100k+ in your 30's?

Just a thought,

Always,

Your Tax Goddess!
PS - if you need a referral, I've got a few Great Financial planners that I trust immensely!

Retirement Accounts - so you think Social Security will Still be around?

Today I was speaking with a client with regards to her business accounting.  She was mentioning that she is now starting to look at expanding her horizons and planning for her future.  I of course mentioned that as a self-employed person she had a few great opportunities to save for herself.  She looked very confused.

But I can only make an IRA contribution can't I?

Oh, I shook my head in shame!  No one EVER tells business owners about the wonders of the new rules and saving opportunities that the government has provided them.

Now, I am most certainly not a specialist in retirement savings / plans (I leave that up to the professionals such as Jason Washo and Michael Juilfs) but I do know a few things:

1) SEP IRA's - you can contribute a maximum of 25% of your net income up to $44,000 & get a write off for it!
2) 401(k) ROTH's - $14,000 of no deduction now, but endless earning potential!

Just between these two you could get some serious savings for yourself!  Now, isn't that better than paying Uncle Sam?

Just a thought, but people say Pay it Forward (great idea!) but don't forget to PAY YOURSELF!

- Your Tax Goddess fighting for your future!

Pay yourself, Not Uncle Sam, for your retirement

Paying Yourself with your Retirement Plan
Retirement?  I am just focusing on getting the business started let alone worried about retiring!

That is what a lot of beginning business owners say when their CPA or Financial Advisor talks to them about setting up a retirement account. What most business owners don't see are the benefits of setting up the accounts:

1.  You get to keep your money and the government doesn't!

Your company gets a deduction for the contributions made on your behalf and therefore the income that you pay taxes on (as the company owner) are lower!

2.  You are not required to pay in the money right away

In most cases there are lag times for contributions to the accounts, some as far as 9.5 months into the future!  2007 contributions for a self-employed Schedule C person do not need to be made until October 15th, 2008 but you get a 2007 tax return deduction for it!

3.  Depending on the Plan you can put away up to or greater than $44,000 per year into your own account! 

Let's see your previous employer to that!  In some cases, depending on your age, time to retirement, and amount you want at retirement, you can put away hundred's of thousands (the max I've ever seen is $276k) a year as a deduction from your companies income!)

As you can see there are some great benefits to putting money into your own pocket for your future!  A lot depends on starting early and starting right, so make sure you talk to your CPA to determine what is the best and most efficient kind of Retirement plan for you!