CPA Scott Adair discussed some retirement planning mistakes to avoid Monday on News 8 at Sunrise.
“The Economic Policy Institute says approximately half of working families are not saving for retirement, which is a significant amount of people who are really jeopardizing their future,” said Adair.
Even those who are saving, aren’t saving enough. “People realize in today’s economical environment that they’re dealing with difficult times to save money for retirement with their other expenses,” Adair said. “You need to start. Everybody needs to start, and the earlier you start, the better of you’re going to be at the end of that day.”
Adair said it’s never too early to begin saving for retirement. “It’s never too early to start getting into the game,” he said. “But Even the I-R-S and Federal Government realizes that when you get older, that they do need to allow for some additional put-aways and set-asides for retirement. As an example, in your 401-K — a normal contribution limit is eighteen thousand — after you reach the age of fifty, you can contribute up to twenty four thousand dollars a year.”
There are other retirement planning options available as well. “The I-R-A is one of them that allows you to set aside fifty-five hundred dollars a year under the age of fifty five and sixty five hundred dollars, over the age of fifty<” said Adair. He added the Simple I-R-A allows you to set aside twelve thousand five hundred, under fifty, plus an extra $3,000 for those over fifty years of age.
Adair said, people should keep in mind as they age, retirement expenses will be higher than expected. “A common myth that people think is when they retire they’re expenses are going to go down, and that’s not actually what the studies are showing,” he noted. “Expenses are remaining pretty much flat or growing, and the primary one of that is health insurance. People don’t plan enough for health issuance and those retirement savings can help out, especially in the the long-term care side of things.”
Adair added one common mistake when it comes to retirement planning is the do-it-yourself mentality. “Really everybody out there thinks that they can do things themselves,” he said. “Retirement planning is one of those things that you can’t take the chance on doing it yourself. You really need to consult with a C-P-A, financial planner or C-P-A financial planner to get the best results for you and your family as you enter those golden years of your life.”
For more information on this subject, visit the New York State Society of CPAs website, click here.