The Facts About Educational and Roth IRA’s Essays

There are some cases, however, where there are exceptions . Some exceptions may include leaving your employer at age fifty-five or older, purchase of a primary residence, to avoid foreclosure of or eviction from a primary residence, and medical expenses not covered by insurance (The basics of a 401(k) plan). If a person chooses to wait to begin taking money from their account, they must begin making required minimum distributions by the year after they turn seventy and one half. The notable exception is for those still working at this age (401 (k) - Wikipedia).

You may add a minimal amount until the age of 60, whereupon you make some smart investments outside of your 401K and increases your savings by tenfold so that you do not need your retirement fund anymore. Do not limit your investing and your future wealth building to your retirement plans.

The first retirement plan created in the United States, is one that the majority of us are familiar, the Social Security Act, signed under law in 1935. Up until 1939, Social Security only paid retirement benefits to primary workers, which for the most part were men. Age 65 was chosen as the retirement age because individuals who survived past childhood were likely to live past 65. However, not everyone benefited from such assistance, even after age 65—agricultural and domestic workers were excluded from coverage (DeWitt, 2010). The excluded group consisted of roughly half of workers contributing to the economy, which the majority were African Americans. According to Larry DeWitt, a public historian from the Social Security Administration, exclusion of such groups was due to tax-collection procedures and not due to racial bias. Although it may seem as though Social Security was meant to be the only form of retirement plan for qualified retirees, it was not. During such time, many individuals strongly depended on their savings as well as on their family.

An individual retirement account (IRA) is an account for individuals to save money for their retirement and receive certain tax advantages on the money saved. With this account, the individual makes yearly contributions based on his or her income, and as a result, the individual obtains income tax benefits. The earnings grow without being taxed until retirement. Depending on the amount of income the individual earns, a portion or all of his or her earnings may be tax deductible (Rejda & McNamara, 2013, p. 285). Two requirements must be satisfied in order to establish a Traditional IRA: first, he or she must be younger than 70 ½ years old; second, the individual must have taxable earnings throughout

Amendments in the 1950’s, 1960’s, and 1970’s defined specific earnings limits and allowed benefit payments to be reduced rather than entirely eliminated when these limits were exceeded. Since 1983, those 70 or older have been able to continue working without any earnings limits. Amendments to the Social Security Act passed in 1996 relaxed earnings limits for senior citizens who had reached full retirement age. Amendments in 1999 created stronger incentives and better supports for the disabled to engage in productive work. In 2000 Congress entirely eliminated the earnings limit for seniors who had reached the full retirement age, giving more seniors the freedom to work without reducing their Social Security benefits.

Tax laws require the traditional IRA make a required minimum distribution to the beneficiary from 70½ years old.

Roth IRA contributions are based on several factors (i.e. annual income and your tax filing status).

The Social Security Act was enacted by President Franklin D. Roosevelt in 1935 to help seniors who were broke from the stock market crash in 1929. He wanted to build a safety net to ensure that every senior would stay above the poverty line and that there would be support for every worker’s family after his or her death. Today, Social Security does do that, but only barley, for many folks. (Epstein, 2006) Social Security was not the first retirement plan that was put into place in 1795 Thomas Paine introduce a pamphlet named Agrarian Justice where he suggested a system of inheritance taxes. His plan was for the tax of 10 percent on inherited property would be put into a special fund. It would be paid out as a one-time stipend to citizens just starting out at age 21, and as an annual benefit to everyone age 50 and older to protect against poverty in old age. Paine’s idea was never adopted even though inheritance taxes eventually were.

In 1935, the Social Security Act became an actual law and with several amendments through the years it paid benefits to the retired, disabled, and Medicare. Any one can begin claiming benefits at the age 62, however to receive full benefits the beneficiary should wait until the recognized retirement age with flexes depended upon the year of birth and to point out that anyone born after 1960 will have a retirement age sixty-seven. Other ways to receive social security compensation is to claim a deceased spouse’s benefits, a child under eighteen that survived their parents or disabled is entitled to benefits any may also receive compensation, and disabled worker between the ages of 50-64 and disabled adult children. Medicare which provides healthcare coverage to many Americans that are 65 or older. Almost twenty million signed up for Medicare within the first three years of the medicare program. With all the changing within the time the cost of living will occasionally rise so important provision for the increase in Social Security benefits creating the automatic cost of living

ROTH IRAs is a special retirement account that allows account holders to put already taxed money into their IRA to not be taxed later or post-taxed like traditional IRAs. That money can then grow over time tax-free, and upon retirement age (currently 59.5), the investor can begin to withdraw from their account without penalty and without any taxation, provided the account has been open for at least 5 years and meets other requirements. Additional Roth IRA benefits as follows:

Roth IRAs are valuable for retirement. If they are used correctly, it is possible for an investor to avoid paying taxes on the growth. Every investor has until the tax deadline to invest up to $5,500, the limit on a year’s investment, from the last year (McCormally). The growth on IRA are also tax free. This means that all the interest accrued for all the years the account exists can be removed without tax. The condition is that an investor must wait until age 59 ½. There are also conditions on how funds may be contributed. Contributions may only be made from money earned on a job (McCormally). This means that extra money from a present may not be used. Additionally, if a person earns $2,000 from a summer job, they may not contribute more than this amount to a Roth IRA. The next rule regulates whether people over a certain income can contribute. A single person making under $116,000, or a married couple filing jointly making $183,000, may contribute the full amount (McCormally). The contribution maximums are then lowered incrementally for

The data above is research collected at Boston College by Social Security Administration. Retirement is something we all have to consider at least once in our life. I thought this would be an interesting article for older adults and younger adults. You can begin getting Social Security retirement advantages at age 62. The graph above, half of all females (48%) and more than two in five males (42%) petition for Social Security benefits when they're age 62. An extra 8% of females and 7% of males claim benefits at age 63, and another 8% of females and 7% of males do likewise at age 64. Put in another unique situation, for all intents and purposes 66% of females (64%) and well over portion of males (56%) petition for advantages before they come

When people are asked how people will plan or rethink for retirement, the first thing that people will think about, is saving. There are some positive ways to save money, the author suggests to the readers to sign up for 401(k) plan. It is a plan help employees save for retirement, 401(k) should allow anyone to build up a nice nest egg. For example, “In Dave Ramsey’s The Total Money Makeover, for instance, he gives us “Joe and Suzy Average” who invest $7,500 per year ($625 per month) using their tax-free retirement account. They do this from age 30 to 70, getting 12 percent interest per year. At the end, they have $7,588,545 to their names.” When people invest in 401(k) plan, it is safer and more money in retirement and it also has a benefit that you don’t need to pay for tax when you take the money out. Beside 401(k), people prefer to invest money in the stock market for retirement-plan. According to author “ During a recent 40- year period,

One of the very first topics that I will elaborate on is the economic aspects of my later life. As of November 13, 2016, I have had an account opened for my retirement fund. Its pertinent that I, personally have this account. I have this account to be my cushion to “fall back on” if any of my other plans for aging do not fall through. “Currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later.” (National Academy of Social Insurance, 2017)

Social Security system provides benefits to retired citizens by taxing the work force on payroll checks. The American Association of Retired People announces, “Maximum Taxable Earnings, in 2012, workers paid Social Security taxes on income up to $110,100. In 2013, the figure will rise to $113,700, based on an increase in average wages.” The AARP shares the maximum taxable earnings from workers has rose since last year. By raising the taxable amount, workers will then be taxed on a higher income. Time states, “People retiring today will be among the first generation of workers to pay more in Social Security taxes than they receive in benefits over the course of their lives, according to a new analysis by the Associated Press.” The analysis shares that many of the newer generation that will retire in the future will be paying more in