Planning for Retirement

Retirement planning is one of the most important financial decisions you'll make. The earlier you start, the more time your money has to grow through compound interest.

The 4% Rule

The 4% withdrawal rate is based on historical research suggesting that retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust that amount for inflation each year, with a high probability of not running out of money over a 30-year retirement.

How Much Should You Save?

• Rule of 25: Multiply your desired annual retirement income by 25 to get your target nest egg
• Example: $60,000/year × 25 = $1,500,000 needed
• General guideline: Save 10-15% of your income for retirement

Retirement Account Types

• Traditional IRA/401(k): Tax-deductible contributions, taxed on withdrawal
• Roth IRA/401(k): After-tax contributions, tax-free growth and withdrawals
• SEP IRA: For self-employed individuals, higher contribution limits

2024 Contribution Limits

• IRA: $7,000 ($8,000 if 50+)
• 401(k): $23,000 ($30,500 if 50+)
• Total 401(k) with employer match: $69,000