Mommy and Daddy Will Not Be Around Forever!

OK family, read this and take action!

For you people who are just getting into the work force for the first time, I want you all to know that your mommy and daddy will not be around forever.  I know that is a shock but I thought that I would bring that reality to you. Mommy and daddy, you are not doing your children a favor by ignoring the fact that they will achieve retirement age one day and will have to have a retirement plan to deal with it. You should be or should have taught them that they have to start investing for retirement today. Just look around at all the people who have not done so today. Many are looking for help and are not finding any. Have your children read this information that I am making available free to the public. This free information may be the difference between living in a retirement home and a “falling down, shootem up” Ghetto at age 65.  

Anyone with earned income to report on a tax return is eligible to set up a tax sheltered IRA. You can put aside up to $5,000 a year.  If you are 50 or over, you can put additional money into your IRA as a “catch up” contribution.

The advantages are that you can deduct all of it from your taxable income if you are not covered by a pension plan or you meet certain income tests.  Even if you do not qualify for the deduction, you owe no taxes on the earnings in the IRA until you withdraw the money.

This is the real deal of an IRA. Your earnings accumulate tax deferred and increase your IRA compounding. A yearly $4,000 nondeductible IRA contribution earning at a rate of 10% per year compounded annually over a 20 year period will grow to about $252,000. If the account were taxed annually at a 25% tax bracket, the account would grow to only around $186,000.   

The disadvantage of an IRA is that if you withdraw money from an IRA before 59.5 years, you are subject to a 10% penalty tax, plus regular income tax on the amount withdrawn, except under certain circumstances.

They are:

1.       Paying certain college or other higher-education bills for you and your family
2.       Withdrawing money to buy or build a house
3.       Paying medical expense that equal 7.5% of your income
4.       For Regular IRA to Roth IRA conversion. 

You may not make contributions to your IRA once you reach 70.5 year of age.  In that year, you must start withdrawing your funds from your IRA.