Retirement in Motion

July 11 2022

Tips and Resources that Everyone Can Use

Knowledge Is Retirement Power

Roth options have become a common choice in many 401(k) plans and 403(b) and 457 plans. The potential tax savings distributed during retirement make Roth plans appealing. Money that goes into a Roth plan is taxed today, but all earnings and future qualified distributions are free of tax. With traditional 401(k) plans, money goes tax-free (and all future growth is free from taxation), but qualified distributions tax at ordinary income rates. Check out AARP’s calculator here to help determine which option might be right for you — and how it could affect your paycheck.

Q&A

What is the most I can save this year in my 401(k) plan?
401(k) savers can contribute up to $20,500 in 2022. Savers aged 50 and older can make an annual catch-up contribution of $6,500 in 2022, for a total contribution of $27,000. These limits apply to savers with 403(b) and most 457 plans.

Pay Yourself First — A strategy in which saving is prioritized and made an essential cost in a budget. Typically, a certain percentage of income is deposited in a savings account, such as your 401(k), each month. Like other “needs” such as housing and food are essential, so is saving. Only once those “need” expenses are covered can the money be used for “want” (discretionary) purchases.

Quarterly Reminder

Are you expecting a tax refund this year? If so, consider creating an emergency fund with some or all of it. It’s essential to have this money available when something unexpected comes up, such as a car, refrigerator, or dishwasher breaking down.

Here are the key tips for an emergency fund:

Aim to have 3–6 months of living expenses saved
Keep separate from your checking account
Ensure there are no (or low) transaction fees; no penalties for withdrawals
Verify you will receive interest earnings on the balance (a little something is better than nothing).

Tools & Techniques

More than 50% of U.S. small businesses are owned by people 55 and older; according to a Spring 2021 survey by SCORE, a nonprofit that provides resources to small-business owners. If your retirement dream is to turn your hobby into a profitable business and finally be your boss, check it out here. You’ll find free access to volunteer mentors, workshops, virtual conferences, a start-up road map and many other tools for developing and launching a small business during retirement.

OSC wants to take care of your stress when making these life-changing decisions. We know retirement, and we help people every day to make retirement as easy of a process as possibl