Planning for Retirement

The right strategy can add more gold to your golden years.

Creating a sound investment strategy now pays dividends later:

Life is running at full speed for you right now. Balancing your professional career with your growing children leaves little time to sit and think about yourself. But there will be a day when things slow down and you’ll actually be able to kick back and relax.

Yes, your retirement still might seem like an event in the distant future, but now’s the time to be as aggressive as possible nurturing your nest egg so you can enjoy a more financially secure life later on. There will come a time when you’re ready to put the wraps on your working career, and you want to make sure you have a strategy in place so that you can retire comfortably.

When it comes to retirement, each option contains certain tax benefits and specific rules for withdrawing money.

Traditional IRAs

Savings in a Traditional IRA are tax-deferred until the money is withdrawn, meaning you'll need to prepare for the tax implications for your withdrawals. At age 70 ½, the Internal Revenue Service requires you begin taking annual minimum withdrawals from your Traditional IRA account, but you can start withdrawing penalty-free at age 59 ½. Also consider there are penalties that come into play when you fail to take the required minimum distribution.

Several factors, including your IRA account balance and projected life expectancy, go into determining what “minimum” actually means for you, so consult with our financial advisors to get the answer.

Roth IRAs

Contributions to your Roth IRA are taxed before they are invested, so generally, these withdrawals will be tax-free. But there are some exceptions. If your Roth IRA account is at least five years old and you’re over age 59 ½, you won’t pay taxes on your withdrawals. If you’re withdrawing money from your Roth IRA before you reach age 59 ½, you’re subject to a 10% early withdrawal penalty tax on the investment gains only. You never will be penalized for withdrawing the amount of your original contributions, no matter your age, and the IRS doesn’t require you to take annual withdrawals.


Many employers offer a 401(k) retirement plan, either a traditional or a Roth. With the Roth option, you contribute post-tax money, so your qualified distributions are not taxable. With the traditional 401(k), you typically contribute pre-tax money, so you’ll pay taxes on the distributions.

Distributions on all 401(k) plans can begin at age 59 ½. You are required to withdraw funds starting at age 70 ½ for the 401(k)s, unless you’re still employed.

Keep in mind the administrative fees of the 401(k) because they will eat into your earnings each year. If you believe these fees are too high, you can either opt out of your employer’s plan or alert your human resources department to your concern and suggest your company consider alternate plans. But if you’re comfortable with the fees and investment choices, you can benefit from your employer matching your contributions up to a certain percentage. Essentially, this is free money you’re receiving for participating in the 401(k) plan.

Contribution limits for 401(k)s can change. Check with your company’s human resources department for the most updated information.

Health Savings Account

Use an HSA to create a financial cushion for retirement and to save money for any medical expenses you incur during your retirement years. Contributions to an HSA do not affect your IRA funding. Funds withdrawn from your HSA are tax-free if the money is used to pay for qualifying medical expenses, and money you deposit in the HSA is tax-deductible. To establish an HSA, you must first own an HSA-qualified High Deductible Health Plan.

Please consult your financial advisor to understand all the tax implications of these various retirement options.

And contact Coastal for all of your retirement planning needs.

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