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The Importance of Retirement Planning


It’s impossible to know what your life will be like in 40 years. There are far too many unknowns—career, family, changing needs, the fate of Social Security, etc. The one thing you can count on, however, is that there will always be the need to look out for yourself and your family.

With this end goal in mind, the easiest and surest way to prepare is through retirement planning and wealth management. Though there are a number of planning options, 401K plans and IRAs are two of the most viable and effective retirement savings vehicles.

Who Needs Retirement Planning?

The short answer to this question is everyone. Regardless of your age, stage of life, or circumstances, early retirement planning is key to creating a solid retirement nest egg. Without proper planning, you cannot expect to have a sustainable source of income throughout your retirement.

Why Do I Need A 401k/IRA?

The amount of money required to comfortably retire can be daunting. With 401K plans and IRAs, time is your greatest ally. The earlier you start saving, the more time your money has to compound and prepare you for retirement. When you start early and stay diligent, you will be surprised by what you can accomplish.

What Is An IRA?

An Individual Retirement Account (IRA) is a type of savings account that is designed specifically for retirement planning. Like 401K plans, they offer various tax advantages and a structure that encourages diligent savings. However, unlike a 401K, an IRA doesn’t involve contribution matching by employers.

Benefits Of An IRA

·         Investment Freedom — IRAs are set up directly between an individual and an investment firm. This means that investment choices are not limited to what plan providers make available—you are free to choose how to invest your money.

·         Tax-Free Growth — Though IRA contributions are made with after-tax dollars, once the money is in your account, there are no taxes levied on the dividends or capital gains that the investments earn.

What Is A 401K?

A 401K is a retirement savings plan that is sponsored by an employer. It allows for you to invest a portion of your paycheck before taxes are taken out. Your employer will match your regular contribution up to an agreed-upon amount. Ultimately, you determine the amount of money that is taken from your paycheck and invested into your account. Most 401K plans are composed of a combination of stocks, bonds, and market investments.

Benefits of A 401K

·         Tax-Free Investments — Every time you set aside a little piece of your paycheck and send it to your 401K, that money is untaxed—this is called your pre-tax contribution. Your money will not be taxed until you withdraw if when you retire.

·         Employee Matching — One of the biggest advantages of 401K plans is that many employers will match your contribution with a contribution of their own. For example, a common agreement is that a company will match $.50 for every $1 you contribute on the first 5% of your salary you invest.

What If I Want To Withdraw From My 401k/IRA?

Unless an exception applies, funds withdrawn from your 401K account before you reach the age of 59 ¼  are subject to penalties and an additional 10% tax. However, the good news is that MCompanies can help partition an active 401K without penalties. Learn more about our 401K Jailbreak Plan.

Why Choose MCompanies For Your Retirement Planning?

Regardless of whether you are ahead or behind in your retirement planning, our financial advisors take the steps to help maximize sustainable growth and ensure that you are headed in the direction you need to be going.

We Assist with Special Needs Planning by helping families plan their assets to help offset the cost of caring for a special needs child.