Ask Terry Questions retirement and roth

retirement and roth

By Terry Savage on June 19, 2014 | Financial Planning / Retirement

Terry, I am almost 58 and am planning to retire with full retirement from that as a Nurse from Loyola Medical Center when I am 66 and 4 months (due to my birthrate). I’m currently contributing 6% when paid bi-weekly into my retirement plan at work thru payroll deductions; however, I am not getting any match from the company plan. Since the plan is company plan, I am wondering if it be best to maintain being in the plan by going to 1% and taking the 5% coming back to me and opening up and maintaining a roth? I would not be asking this as an alternative if I were being matched with the 6%. This is also our only form of savings right now other than my husbands pension and part time income since my husband is retired and me to retire in 8 years.

Terry Says:  I understand your situation, but there’s more to it  First, do you qualify for a Roth contribution based on income (For tax year 2014: May not be eligible if your income is over $129,000 for single filers and $191,000 for joint filers.)  Second, do you have any “special” choices in your company plan that may yield higher rates than you could get in the funds you’d put into a Roth (special GICs, insurance products offered only inside retirement plans, for example)?

The benefits of a Roth, of course, are that you don’t have to withdraw some of the money starting at age 70-1/2,  it grows tax-free, and you can keep contributing if you keep working into later years.  BUT, all this begs the real question:  Why don’t you do BOTH (if you qualify)?





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