Planning for Your Future


Retirement should be one of the most enjoyable periods in your life. Time spent relaxing, traveling, enjoying time with family and friends, taking up a new hobby, or even realizing your dream of starting your own business. It shouldn't be is a time to worry about your finances and wonder if you have saved enough money to live comfortably during your retirement.

Save Early and Save Often

Although it's never too late to start saving for retirement, the sooner you begin saving the more time you have to make your money grow, and the better funded your retirement plan should be. One of the most powerful tools in your retirement plan is the power of "compounding", which is simply stated making money on your money through interest gains on your principle. Even if it's as little as $50 a month, putting something aside every month on a regular basis through an automatic savings retirement plan can add up quickly.

Employer Sponsored Retirement Plans

If you are currently employed, one of the best ways to fund your retirement is through your company's employer sponsored plan, i.e.401(k), 403(b). Participating in your employer sponsored plan gives you an immediate tax advantage because the money deposited into your account is "pre-taxed", which means that you can defer taxes until after you retire. Your money grows tax-deferred and in many cases, your employer may match some or all of your contributions. If you are self-employed or your employer doesn't offer an employer sponsored plan, you may want to want to consider other retirement savings plans such as Traditional or ROTH IRAs, SEP-IRA, and Individual(k)s.

Individual Retirement Accounts

As with employer sponsored plans, an Individual Retirement Account (IRA) offers significant tax advantages. The two primary types of IRA plans are Traditional and ROTH IRA's both of which offer tax benefits. A Traditional IRA is funded with "pre-tax" dollars and allows your money to grow "tax-deferred", which means that you only pay taxes on your money when you withdraw it. In contrast, a ROTH IRA is funded with "after-tax" dollars and allows your money to grow "tax-free", which means that you pay taxes on the earned income now, but you should not have to pay taxes on it in retirement. Consult your tax professional to see which kind of IRA plan is right for you.

Realistic vs. Idealistic Retirement Goals

How much do you think you will need in retirement? Will you continue to work part-time? Will you move to a smaller house or relocate to another part of the country. The old rule of thumb was that you will need approximately 70% of your current salary in retirement to live on, but that will depend entirely on how much money you have accumulated in your retirement and personal portfolios and your individual circumstances. If you plan to travel all over the world, go back to school or pursue a life-long goal, you may need 100% of your current salary. Items like health insurance and health care may actually increase after you retire. A Financial Professional can help you develop a retirement strategy that's right for you, and can save you valuable time and money

Planning for your retirement is more than just saving and investing for tomorrow. It's about developing a plan today which will allow you to enjoy your life to the fullest after you retire. At California Coast Credit Union, we are committed to being your financial partner and helping you achieve your goals, because with us, we have your best interest.