It is important to understand the limitations of Social Security when you are planning for your retirement years. Exactly how much you will receive hinges on how much you contributed over the years. The maximum Social Security benefit is close to $39,000 annually, but you would have had to have made the maximum taxable amount throughout your entire career to receive the maximum benefit.
The average Social Security payout is less than $1,100 per month. Clearly, this is not going to do the trick for most people so you are going to have to save money if you want to enjoy your retirement years to the fullest. This is often done through the utilization of individual retirement accounts or IRAs.
There are two different types of individual retirement accounts that are most frequently utilized. One of them is the traditional IRA. With these accounts the contributions that you make are made with pre-tax earnings. You do not start paying taxes until you begin withdrawing money from the account, which you can begin doing when you reach the age of 59 1/2.
With a Roth IRA you contribute into the account with after-tax earnings. However, you pay no tax on income that you start receiving once you begin tapping into the account.
Individual retirement accounts can be an important part of a long-term financial plan. Should you be interested in creating a comprehensive plan for the future with professional guidance, don’t hesitate to take action to arrange for an appointment with a good Indianapolis retirement planning attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.