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Phil Cannella is the CEO of Retirement Media Inc. and the founder of First Senior Financial Group in Pennsylvania.
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Phil Cannella
  • Tips To Plan Your Retirement Safely 0 comments
    Dec 10, 2012 5:39 AM

    The financial market offers a variety of options to manage our savings in order to grow a personal wealth on which we can retire on. However, not every option is as convenient as it might seem and you need to careful investigate over the different opportunities. There are a couple of things you should consider about retirement plans.

    First of all, ask yourself which are the opportunities you have to save your money. You can count on different options. Your employer will suggest you different types of retirement plan, each of which has its advantages and disadvantages.

    If you work in the private sector, you will probably be suggested a defined contribution plan. In this case, your employer will agree to negotiate a contribution plan allowing you to get an annual income once you will have retired. The income will be a fixed amount of money which will depend on your annual contributions and is therefore related to the number of years you have been working for that employer.

    Defined benefits plan is a retirement plan widely used in both private and public sector. According to this kind of plan, the annual income you will get will be based on your average earnings as a worker, which will be calculated on your final salary. Generally, the three last months of work will be take into consideration to calculate the income. People whose salary is subjected to variations, due to extra work such as commissions, will be twice as likely to find this option convenient.

    How can I make my retirement budget grow?

    Investment products can be purchased in order to get a regular income and increase your retirement budget. The total amount of the income, however, will of course depend on how well do your investments, which is rather dangerous for retirees. If you know how do these options work, you will be able to choose the most suitable for your exigencies.

    IRA. If you intend to create an individual retirement account (IRA) you can choose between two options: the traditional IRA formula allows you to make an annual contribution to your personal fund and to reinvest the money in order to grow your wealth. However, any withdrawal will be taxed according on how much you have accumulated over the years. A tax-free account will be safer instead. Thanks to this option, in fact, you are allowed to withdraw the money accumulated for free.

    Annuities. Along with IRA, annuities are among the most popular solution to reinvest your retirement income. In this case too you can choose between two options, but in any case the gaining will be taxed as an ordinary income. Tax rates will therefore depend on your income tax rate. However, there are also other factors to be considered. Variable annuities allows you to get a variable annual income whose entity depends on the productivity of your investments. The risks associated with this type of annuity can be avoided by choosing a fixed annuity. The annual income you will get using this product, in fact, won't be influenced by the market fluctuations.

    Ask your financial adviser. In order to avoid risky investments, you should better ask your financial adviser which are the advantages and disadvantages of each type of investment option. You can count on qualified retirement planning experts in Philadelphia to get valid advice on how to manage efficiently your retirement plan.

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