Guidance

RESOURCES TO HELP SHAPE YOUR FINANCIAL FUTURE

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Lisa M. Micka, CFP®
First Vice President
Wintrust Investments

There have been many recent tax code changes, some of which have created unprecedented opportunities for savers of all ages. Furthermore, we are now faced with a growing list of retirement savings options, each of which offers its own advantages along with certain constraints.

These vehicles are not one-size-fits-all, and careful consideration of factors such as income, age, and overall life goals is critical in designing the optimal retirement strategy for you. Most workers today do not have a pension upon which they can rely, which makes the task of planning for a secure retirement an urgent reality. The following are a couple of common scenarios savers face today with the options currently available in the marketplace.

My company has recently introduced the Roth 401(k)…
More and more corporations are now offering the Roth 401(k) as an alternative to the traditional 401(k). For many workers, the Roth 401(k) has proven to be a powerful tool to build wealth on a tax-free basis subject to certain limitations. Given the current tax code, one may contribute as much as $16,500 for those younger than 50, and $22,000 for employees over 50. For those ineligible for a self-directed Roth IRA due to the income limitations in place, this is the only mechanism available to take advantage of this substantial tax savings opportunity.

I am currently maxing out my 401(k) contributions and want to supplement my retirement savings…
To secure a comfortable retirement, many investors are now saving up to 20% of their current income. If you determine that your 401(k) alone is not sufficient to meet your savings goals, you may be able to supplement the 401(k) with a self-directed traditional or Roth IRA. The Roth conversion opportunity, which is now available to earners with income in excess of $100,000, may also enable you to indirectly fund a Roth.

These are just two examples of the challenges and possibilities available to savers today. The start of a New Year is the ideal time to review your current savings plan to ensure that your strategy is best positioned to help you achieve success. Also, it’s important to note that these newfound opportunities extend beyond conventional workers, and there are more options for self-employed individuals than ever before.

In looking ahead, there will undoubtedly be additional uncertainly in the future as tax laws expire and new legislation is passed. With this, we encourage all savers to consult with one of our Financial Advisors to ensure they are taking advantage of the opportunities available and securing the comfortable retirement they deserve.