Standard Bank Blog

The 2011 IRA Contribution Window is still open

We all know IRAs are an important piece of the retirement puzzle.  That is why you should not miss an opportunity to contribute to yours and maximize your chance to reach your goals!

The IRA Contribution window for a given year starts on the first of January and closes on tax day of the following year.  For 2011 that means that January 1st, 2011 was the beginning and April 17th, 2012 is the close.  That means you still have time to make your 2011 contributions!  For all of you that file for tax extensions those do not apply to IRAs so be sure to make your 2011 contributions no later than April 17th.

What is a happy retirement?  Is it peace of mind? Own your home without making monthly mortgage payments, with extra money set aside for unexpected expenses or healthcare costs.  Freedom? Easily pay your monthly bills, with enough extra cash to live comfortably and enjoy the occasional luxury.  Recreation & Leisure? Enjoy time hosting friends and family, participating in social opportunities and pursuing your favorite hobbies.  Travel & Adventure? Look forward to taking that long-awaited vacation or family cruise, sooner rather than later.

It’s often called the miracle of compound interest: interest that is paid each year increases the amount on which interest is calculated the next year, a phenomenon that can lead to huge growth over time.

The key word here is time, and that means that the earlier you start saving, the better. For young people who are struggling to pay off student loans or buy a home, putting money aside for the future seems not only impossible, but unnecessary: after all, you’ve got years and years to save, and it will be easier down the road when you’re making more money.

But that kind of thinking can cost you. Imagine a 20-year-old who saves $50 a month every month, either in a 401(k) or a money market fund earning 6% interest. At 65, she will have $138,489. But her brother, who likes to drive a new car every year, doesn’t start saving until he’s 35. His $50 monthly savings will add up to only $50,477 when he reaches 65. Her actual contributions total $9000 more than his, but she ends up with over $88,000 more. Think she’ll let him borrow her sports car once in a while?

OK, now we know why we should start saving—the next question is how. First rule: if your employer offers a 401(k), enroll now. It’s much easier to save when the money is automatically deducted from your paycheck. And if you are one of the lucky ones whose plans include an employer match, make the effort to sign up for the maximum deduction—why pass up free money?

We all know we should kick the latte habit and make coffee at home, brown-bag it instead of spending big bucks on lunch, and walk or take the bus instead of hopping into a cab.  But here are some more saving ideas you may not have thought of:

We all know IRAs are an important piece of the retirement puzzle.  That is why you should not miss an opportunity to contribute to yours and maximize your chance to reach your goals!

Repayment is not due as long as you live in the home as your primary residence, continue to pay required property taxes and homeowners insurance, and maintain the home according to FHA requirements.  You or your heirs will not be required to repay more than the value of your home at the time the loan is repaid, even if your loan balance exceeds the value of your home provided you or your heirs decide to sell the home.  Best of all, any remaining equity goes to you or your heirs once the loan is repaid.

So you are looking for a few extra dollars to fill the gaps, take an extra vacation, or fix up the house.  The solution might be beneath your feet...

As with any other major financial decision, you should carefully consider all the facts and get expert advice before choosing a Reverse Mortgage.  Fortunately, a Reverse Mortgage has built-in safeguards to help you determine if it is right for you.

The beginning of 2011 is fresh in our minds, but we have not yet forgotten 2010.  Do you have an IRA?  If so, are your contributions where you want them to be?  You can still add money for 2010 up until the tax deadline!

For those of you who have not yet setup an IRA read on for some basic knowledge to help you get going with an IRA to get 2011 off to a great start!

Which IRA Type is best for you?

A Reverse Mortgage is a loan that allows you to access some of the equity in your home to obtain cash now. The amount you receive is primarily based on current interest rates, age of the youngest borrower, and appraised value of the home (up to certain limits).

Peace of Mind? Own your home without making monthly mortgage payments, with extra money set aside for unexpected expenses or healthcare costs.