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December 2017 Whitepapers
Many people do not realize you have until April 15, 2018, to fund an IRA account, which in many cases could reduce your taxable income. Saving for retirement has many benefits. Yet, many still fail to save for their retirement, for reasons that may sound good but are in fact detrimental. This article contains four genuinely good reasons to save for your golden years ahead. WT Wealth Management can assist you in self-directed retirement plans, such as IRAs and ROTH IRAs, along with company and self-employed plans, such as Simple IRAs, SEP IRAs, and even solo 401K plans. Funding a retirement plan is the smartest, most cost-effective way to grow assets, thus to secure and insure a comfortable post-career life.

Excuses vs. Reasons
Excuses are merely justifications for failing to do what is in our best interest to do. The four good reasons for saving for retirement are:
  1. To not depend solely on the American welfare system to bankroll your retirement.
  2. To spare you the necessity of living with your children simply because living on your own is unaffordable for you
  3. To lower your income taxes by putting money away in a tax-deferred IRA
  4. To compound your returns on your investments with tax-deferred savings.

Do those reasons sound better than your excuses? Let's explore each one.

1. To not depend solely on the American welfare system to bankroll your retirement

Although many people depend on the welfare system for emergency financial assistance or as a stepping stone toward financial independence, it's dangerous to make the welfare system your sole source of income when you retire, as it would crimp your lifestyle considerably, and you may not even be able to afford to meet your fundamental needs.

2. To spare you the necessity of living with your children simply because living on your own is unaffordable for you.

If you have children, you probably wouldn't mind spending as much time with them as you possibly can. But, for the most part, you probably also want that to be at your discretion, for most people don't want to spend their golden years living with their grown children, whether they welcome you to live with them or see you as an unaffordable encumbrance. Such financial dependency also means you renounce your independence to live as you please.

You therefore must put away enough to meet your retirement expenses; if you're like most people, you cannot count upon receiving a major inheritance or winning the lottery. The channels for savings are either: (1) taxdeferred, or (2) non-tax deferred, ("regular savings"). The advantages of a tax-deferred savings account over a "regular" one are:



3. To lower your income taxes by putting money away in a tax-deferred IRA.

If you make deductible contributions to a traditional IRA, it reduces the income you have left, because you must take funds from your savings to make those contributions. If you make salary-deferral contributions to a company savings plan on a pre-tax basis, this reduces the amount of take-home pay you receive. However, the net effect is less than the amounts you contribute to these plans, because the amount by which your income is reduced is less than the amount you contribute.

Let's look at some examples.


Example 1:


Example 2:


Additionally, these contributions reduce the amount of income taxes you pay.

Example: You put $15,000 into your company retirement account yearly at an 8% rate of return, your tax rate is 28%, and you make this investment over 20 years,, yielding these estimated net results:





You thus save $49,035.31 in taxes by investing in a tax-deferred account, as opposed to a regular savings account.

4. To compound your returns on your investments with tax-deferred savings.

If you add your savings to a regular savings account, the earnings that accrue on those amounts are taxed in the year those amounts are earned. This reduces the amount you have available to reinvest by the amount of taxes you must pay on these amounts.

Example: You invest $50,000, which accumulates interest at an 8% rate, yielding $4,000 in earnings. If your tax rate is 28%, $1,120 goes to the IRS, leaving you with $52,880 to reinvest. You not only lower your taxes but also increase your investment's value after taxes due to the compound effect of tax-deferred growth:



These figures increase with a longer earnings period and a larger amount saved.

Conclusion


The above examples show the compound effect tax-deferred growth creates, which attests to the appeal of IRAs and employer-sponsored 401(k) and similar plans. Roth IRAs can offer tax-free options.

As such, if you are eligible for a Roth IRA or work for an employer that offers Roth 401(k)/403(b), you must carefully determine which is more suitable for your financial profile to maximize the financial security of your retirement.

Plan now, save, and play later, with more money. WT Wealth Management can help you design a plan and strategy to start your road toward a comfortable retirement.

Sources


Appleby, Denise. "Top 4 Reasons to Save for Retirement Now."
https://www.investopedia.com/articles/retirement/07/noexcuses.asp

Disclosure


WT Wealth Management is a manager of Separately Managed Accounts (SMA). Past performance is no indication of future performance. With SMA's, performance can vary widely from investor to investor as each portfolio is individually constructed and allocation weightings are determined based on economic and market conditions the day the funds are invested. In a SMA you own individual ETFs and as managers we have the freedom and flexibility to tailor the portfolio to address your personal risk tolerance and investment objectives – thus making your account "separate" and distinct from all others we potentially managed.

An investment in the strategy is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carry certain specific risks and part or all of your account value can be lost.

In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector ETF's and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs investments may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nation's experience. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Bonds, bond funds and bond ETFs will decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax.

Diversification and asset allocation may not protect against market risk or a loss in your investment.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

WT Wealth Management is a registered investment adviser in Arizona, California, Nevada, New York and Washington with offices in Scottsdale, AZ Jackson, WY and Las Vegas, NV. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Managements web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management web site on the Internet should not be construed by any consumer and/or prospective client as WT Wealth Management solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of WT Wealth Management, please contact the state securities regulators for those states in which WT Wealth Management maintains a registration filing. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's business operations, services, and fees is available at the SEC's investment adviser public information website – www.adviserinfo.sec.gov or from WT Wealth Management upon written request. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated herein, and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

WARRANTIES & DISCLAIMERS

There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

View Disclosure
WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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