Question

a. Do you think it is important to save for retirement, and why?
b. What is your strategy of achieving your goal to save for retirement?
c. What is your opinion about 401(K) and IRA?
d. How taxes can impact your retirement income and how can you stretch your retirement funds?

Answer 1

a) It is important to save for retirement because
you can work a certain number of years.
In other words, you will not be able to continue
working after a certain age. Therefore, if you save while
you work you will be able to spend the money during your retirement
years. Since you will not be able to work during the retirement years
because of old age, you should save up for retirement.
b) The strategy to save for retirement is that you save on a monthly basis.
In other words, you set aside a certain percentage of your monthly income.
The money accumulates and your savings will compound over time.
c) A 401(k) plan is a pre-tax contribution made by an employee towards
retirement. The 401(k) plan is offered by an employer to an employee.
There is an annual limit to the amount an employee can contribute towards his/her
401(k) plan.
An IRA is an individual retirement account similar to a 401(K).
An IRA is a tax deferred retirement plan.
IRA's are not offered by employees, but are offered by banks or
brokerages.
The 401(k) and IRA plans are good retirement plans. The plans
are way of regularly saving for retirement. These kind of plans are hugely
popular among employees all across the world because it is a good way
of accumulating money for retirement.
d) When you opt for a tax deferred retirement plan like a 401(k) or an IRA,
you choose to pay taxes at your retirement age.
Therefore, taxes do impact your retirement savings because when you withdraw the
money at age 59.5, you are supposed to pay income tax on the whole amount.
You can stretch your retirement funds by saving after retirement also.
For instance, once you reach age 59.5, you can set up a savings account and save more money.