Retirement

Where will your retirement money come from? If you’re like most people, qualified-retirement plans, Social Security, and personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources.

Needs vary when it comes to selecting an IRA, depending on where you are in life and how you want your funds to be taxed after retirement. It’s never too late (or too early) to start planning for your future, take your first step by scheduling a consultation with Wealth Management at Hudson Valley Credit Union.

  • An Individual Retirement Account, or IRA, is a tax-efficient way to save for retirement.
  • Both Traditional and Roth IRAs offer substantial tax savings, but each has its own uses, advantages, and guidelines (see table below).

Social Security

Social Security was designed as a safety net. Just how much it matters to your financial well-being will depend on your other retirement income sources, including how much you’ve managed to save; whether you’ll receive a pension from your employer; and whether you will have any other sources of income in retirement. Once you understand these benefits, it becomes clear that Social Security is an income stream that can play a key role in funding your retirement.

Whether you’ve given Social Security much thought over the years or not, you have been involved in the program since the first time you had wages withheld for FICA (The Federal Insurance Contributions Act) taxes. All of those FICA contributions you’ve made since then will eventually be returned to you in the form of monthly Social Security benefits checks and hospital insurance coverage under Medicare.

Social Security benefits are generally not inconsequential. For a dual-income couple, with each spouse entitled to benefits under their own records, annual benefits could add up to a significant amount of income.

Better still, Social Security benefits are adjusted annually for inflation and are guaranteed to last your lifetime. Your benefits can even continue throughout your spouse’s lifetime if he/she outlives you.

Retirement is Not as Far Off as it Seems
We all want to find ourselves enjoying a comfortable lifestyle when the time comes to retire. The tough part is anticipating all of the steps required to get there-especially when each of those steps requires us to make decisions that may not be as simple and straightforward as we’d like.

See Your Choices More Clearly
Living the retirement you’ve always imagine will take foresight, patience, and a smart plan. So you’ll want to turn to someone who can help you break down your decisions and shed light on your options-someone like your financial advisor. You’ll see things more clearly if you can filter out the confusing and sometimes conflicting messages, such as those surrounding the role Social Security can play in supplementing your retirement income.

Is Social Security Part of Your Plan?

Social Security is among the largest of the big government programs. Yet, if someone were to ask you what you know about it, and about what role it might plan in funding your own retirement, how well would you be able to respond? Learn more.

The program has been in the headlines for years, but the news regarding its health has been so confusing, you may not have taken into account your potential benefits under the program when planning for retirement. You may also not have considered that those benefits could be sufficient enough to impact your plans.

But, when it comes to Social Security, there may be more to the program than you might think. In fact, the more familiar you become with its features, the more likely you are to find that it could, depending upon your circumstances, play a key role in creating a comprehensive retirement plan. Learn more about the Social Security timeline.

It All Starts with a Comprehensive Plan

Advisors who have made a commitment to understanding the ins and outs of the Social Security program and who have the background needed to help you make the right decisions when it comes to fitting Social Security into your future can be a valuable resource.
Your advisor can assist you when it comes time to make such key decisions as:

  • When and how to begin the filing process
  • How to maximize your benefits
  • How to coordinate your benefits (and other retirement assets) so that they last throughout your lifetime
  • When and how to file for Medicare
  • How to coordinate your benefits (and other retirement assets) so that they last throughout your lifetime

Traditional & Roth IRAs

Needs vary when it comes to selecting an IRA, depending on where you are in life and how you want your funds to be taxed after retirement. It’s never too late (or too early) to start planning for your future, take your first step by scheduling a consultation with Wealth Management at Hudson Valley Credit Union.

  • An Individual Retirement Account, or IRA, is a tax-efficient way to save for retirement.
  • Both Traditional and Roth IRAs offer substantial tax savings, but each has its own uses, advantages, and guidelines (see table below).

Contributions

The maximum amount you can put aside annually for an IRA varies by the year in which your contributions are made, and is dependent upon your income and marital status. If you are turning 50 in the tax filing year, you can also benefit from additional catch-up contributions. IRA contributions must be made by your tax filing date.


Compare Traditional & Roth IRAs

Traditional IRARoth IRA
Maximum annual contributions allowed per individual2018: $5,500
2019: $6,000
2018: $5,500
2019: $6,000
Maximum annual contributions allowed per married couple2018: $11,000
2019: $12,00
2018: $11,000
2019: $12,00
Maximum catch-up contributions allowed per individual turning 50 in the taxable year$1,000$1,000
Who can contribute?Anyone under age 70 1/2 with earned income from employmentAnyone with modified adjusted gross incomes (MAGI) under $110,000 for single taxpayers, $160,000 for married taxpayers filing jointly
Are contributions tax deductible?Yes, in some instances depending on income and availability of employer-sponsored retirement planNo
How long can I contribute?Until age 70 1/2, provided you or your spouse have earned incomeNo age limit, provided you or your spouse have earned income
When are distributions allowed?Without penalty upon age 59 1/2, or earlier if funds used for first-time home purchase, higher education expenses, or qualified medical expensesIf they have been held for five successive tax years, distributions are allowed without penalty if:
- You reach age 59 ½
- You become disabled
- You are using for a first-time home purchase, or higher education or qualified medical expenses
- Your death results in a distribution of funds
Are allowable distributions taxed?YesAccount is tax free if funds have been held for five successive years, or;
- You reach age 59 ½
- You become disabled
- You are using funds for a first-time home purchase, or higher education or qualified medical expenses
- Your death results in a distribution of funds
Are there specific withdrawal requirements?You must begin withdrawing funds at age 70 1/2 based on a specific withdrawal calendar—contributions also end at age 70 1/2You are not required to take minimum distributions at age 70 1/2 or older, and in fact you may continue to add to your account regardless of your age


The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

Immediate vs. Deferred Annuities

Looking forward to retirement? It's critical to understand the difference between immediate and deferred annuities.

Catch-Up Contributions

Workers 50+ may make contributions to their qualified retirement plans above the limits imposed on younger workers.

Orchestrating Your Retirement Accounts

Getting the instruments of your retirement to work in concert may go far in realizing the retirement you imagine.