Dariusz Godlewski was featured on ValueWalk with his take on retirement savings for the generations:
“People should start saving for retirement as early as possible in their lives so they can take advantage of compounding returns,” says Dariusz Godlewski, licensed investment advisor representative and the president of Financial Wealth Alliance. “If you’ve delayed but have a good number of working years left, there’s time, but make the most of it by getting with a financial professional to understand your many options.”
Godlewski offers these retirement savings tips for each age group, from the youngest generation of working adults to the oldest:
Gen Z
A Roth IRA can give a young working adult a head start toward saving for college as well as retirement. “As soon as children or grandchildren have earned income, either you, as the parent or grandparent, or they can open and contribute to a Roth IRA in their name,” Godlewski says. The maximum amount that can be contributed for 2021 is $6,000. One benefit is that Roth accounts grow tax-free as long as all IRS rules are followed. Another benefit is: “After the account has been open for five years, any amount contributed can be borrowed or taken out for any reason without any taxes or tax penalties due,” Godlewski says. “That means your child could have a very flexible way to access money for college or a down payment on a house later on.
Gen Z (Millennials)
Godlewski says those in the mid-20s to 40s age group need to take advantage of employer-sponsored retirement plans such as the 401(k). Employees can contribute up $19,500 to their 401(k) plan in 2021. The added benefit is that many companies match a percentage of employee contributions. “One rule of thumb is to max out pre-tax contributions during these years up to the maximum match by your employer,” he says.
Gen X
“After age 50, you can contribute $7,000 per year to an IRA or Roth IRA in 2021, depending on your income and IRS rules,” Godlewski says. “Some permanent life insurance or deferred income annuity products can allow you to save for retirement while providing other optional benefits like disability, long-term care insurance or spousal protection.”
Baby Boomers
If you are 55 or older, Godlewski says it’s time to get serious about the kind of retirement lifestyle you want and how much savings you will need to support it. But have a plan for taxes down the road. Tax law requires you to start withdrawing money and paying income taxes on tax-deferred retirement accounts every year beginning at age 72. “Start working with your financial professional early,” Godlewski says, “because there may be ways to save on taxes for the long term by using strategies over the five to 10 years preceding retirement.”
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Read the original article here: https://www.valuewalk.com/are-you-behind-in-retirement-savings/
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