Page 6 - Gallagher Benefit Services - Financial Newsletter

Individual Retirement Account (IRA) Options
Traditional IRAs are not a liated with any employer but o er the same tax advantages and earnings opportunities as company sponsored retirement plans. The annual contribution limit is a lot less ($6,000). If you are age 50 or over you can contribute an additional $1,000. IRAs do o er thousands of stocks and other investment options while company sponsored plans o er a limited selection of mutual funds as chosen by the employer. April 15th is the deadline for making contributions to an IRA for the prior year for tax purposes. Roth IRAs allow you to contribute money on an after tax basis and the earnings on your investments grow tax-free. When you withdraw the money at retirement age you do not pay any taxes. Roth IRAs are subject to the same contribution limits, the same deadline and o er the same array of investment choices as Traditional IRAs.
One resource where you can go to learn more about both types of IRA’s is
www. delity.com/retirement-planning/learn-about-iras/what-is-an-ira. Choosing your investments
After you’ve determined how much you want to save in your retirement plan, you need to decide how to invest your money.
Risk/Reward
Investing is all about understanding and managing risk. Many investors are concerned with market risk – the possibility of an
investment declining in value. However, there are other types of risks to consider when making your investment
elections. In ation risk refers to the potential for an investment to not keep pace with in ation. If you play it too safe you might actually be losing money over
time. Another important consideration is longevity risk, or the possibility of outliving your retirement
savings.
Keeping this information in mind, you need to identify your comfort level with risk as it relates to retirement
savings. Investing too aggressively or too conservatively can be risky. Also, consider the
number of years you have until retirement. The further away
retirement is, the more you can a ord to invest
more aggressively as you will have time for
investments to rebound after poor performance.
Key Investment Strategies
You can manage risk through the investment strategies of asset allocation and diversi cation. Asset allocation is the practice of investing in various types of asset classes such as stocks, bonds and stable value investments. This strategy spreads out your investment risk because if one type of investment is not doing well, other types may be. After determining the di erent asset classes you wish to invest in you can further diversify your account by selecting a variety of investments within each asset class.
Whether you have just chosen your strategy or are a seasoned investor, you want to be sure to review your account periodically and determine if your needs have changed. Then you can readjust your portfolio accordingly.
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Wellbeing — Make it your own!