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Tuesday, November 28, 2023

Money Matters

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Retirement planning: are you taking advantage of all opportunities?


Provided by RBC Wealth Management
and Dave Dupont


What if you ran out of money at the age of 75? What good is an increase in life expectancy if the quality of that life suffers?

We’re easily blinded by an instant-gratification society where advertisers paint tantalizing pictures of a leisurely retirement including days on the golf course and vacations in exotic locations. But, this could be decades away for many people. The bad news is that you have to wait for it. The good news is that you still have the advantage of time to help make those retirement dreams a reality.

IRAs — An Individual Retirement Account, or IRA, comes with tax advantages to mitigate the financial impact either upfront or in the future at the time of withdrawal. For 2014, a maximum contribution of $5,500 is allowed, $6,500 if you’re age 50 or older.

Company 401(k) and matching — Nearly half of all employees in the private sector have access to a retirement benefit plan, most likely a 401(k). These programs allow flexibility in how you save and how you pay taxes, either on a deferred or prepaid basis. Additionally, many companies offer a matching component — meaning for every dollar you invest they will match all or a portion of that dollar. But, in order to get the match you need to save the required minimum. Failing to do that, you miss out on what could be a lucrative employee benefit.

Roth 401(k) — This new investment vehicle offered by some employers, similar to its Roth IRA kin, places money into an account with after-tax dollars allowing an individual to take it out tax-free after the age of 59 and one-half. However, unlike its Roth IRA counterpart, it is not subject to the $5,500 IRS yearly contribution limit.

Employee pension plan — Whether your company contributes to your plan or not, chances are you have the option to contribute to a fund that pays you back at retirement.

Your savings and investment strategies have both a direct and indirect effect on your retirement plan. Make the most of tax advantages and savings vehicles available for other major life expenses, such as college savings programs, life insurance, long-term care and disability insurance.

Consult a financial professional who can help you make decisions about your investments. The steps you take today will effect how comfortable you are in your golden years.

This article is provided by Dave Dupont, a Financial Advisor at RBC Wealth Management. RBC Wealth Management does not endorse this organization or publication.

RBC Wealth Management, a division of RBC Capital Markets LLC, Member NYSE/FINRA/SIPC

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