In celebrating Easter, a time of joy and renewal, our good intentions fill us with hope and abundance – but don’t let your good ideas slip away when daily events threaten to crowd them out.
In her book, "It’s Only Too Late If You Don’t Start Now," Barbara Sher tells us to make a list of our dreams for the future and then start paring to the ones that we really want. Cut dreams that no longer fit you. Eliminate anything that doesn’t make you smile and your heart beat faster. Now turn your dreams into goals. Sher says, "Your potential for greatness requires you to create the environment you need to do your best work."
Hand-in-hand with life dreams is accumulating the resources to support yourself. This means that, at the same time we are responsible for today’s expenses, we don’t forget about the future. One good way of taking care of yourself is to establish an individual retirement account before April 15 or maximize your retirement account contributions at work.
You’ll want to increase your savings to take full advantage of programs such as employers who match a portion of your retirement account contributions. Otherwise, you are leaving money on the table.
For IRAs outside of work, you have several choices. These choices depend upon 1) if you participate in an employer retirement plan, 2) your income level, and 3) your income tax filing status.
If you do not participate in a retirement plan at work, you have the most choices. You can contribute $4,000 (plus an additional $500 if you are 50 or older) to a deductible or nondeductible IRA regardless of your income. If the contribution is made to a deductible IRA, you will reduce your taxable income by the amount of your contribution. The downside of a deductible IRA is that you will pay tax on 100 percent of your IRA when you begin to take it out.
If you do not qualify for a deductible IRA, another good choice is a Roth IRA. A full contribution may be made if your income is $95,000 or less (single) or $150,000 or less (couples). A Roth IRA does not allow you to deduct the contribution from your taxes, but if you do not touch the Roth for five years or more, the earnings will be tax-free when you begin to take them out.
If your spouse does not have earned income, IRAs can be established based on the earnings of the employed spouse.
An excellent publication with full coverage of IRAs is "Individual Retirement Accounts" by Marshal Goetting at Montana State University. You can get a copy of the publication at http://www.montana.edu/wwwpb/pubs/mt9807.pdf.
Don’t let this opportunity pass. Start funding your future on Monday.
– 30 –
Judy McKenna, Ph.D., CFP, Family Economics Specialist, Colorado State University Cooperative Extension, email@example.com