These are the most common excuses I hear for NOT planning smart for retirement.

Reason #10: “I’m too busy”

I can’t tell you how often I hear this excuse. So many people want to plan for a better retirement, but they don’t have time. They think they’ll take care of it tomorrow or the day after that… and before they know it, several years have gone by. The best advice I can give you is to stop procrastinating and start planning today.

Reason #9: “It’s too soon”

I don’t know how this happened, but many people have adopted the notion that you don’t have to start plan-ning for your retirement until you’re almost there. This is totally incorrect. The truth is, the sooner you start planning, the better chance you stand of having the kind of retirement you want. It’s never too soon. Many people start planning in their early twenties!

Reason #8: “It’s too late”

If you’re already near or past your retirement eligibility date, you may think that whatever you’ve got is what you’re stuck with and it’s too late to do anything about it. Think again. If you’re unsure of what your options are, speak to a professional. Even if you’ve already retired, it’s important to consider how you’re receiving income and how long it will last. It’s never too late to revise your income distribution strategy.

Reason #7: “I don’t need to”

I’ve heard this excuse many times and it always baffles me. Many people think that because they’ve been diligent about contributing to a savings account, they’re all set. While saving for retirement is good, you also need a plan for income distribution once you enter retirement. Are you certain that what you’re saving will be enough? Have you considered your distribution plan? What about taxes? What about inflation? And are you sure your money will be properly invested? There may be other, better options for you and it may prove worthwhile to look into them.

Reason #6: “I don’t have enough money to get started”

This excuse seems marginal at first glance, but there is some truth behind it. You need to have money to save or invest money. However, unless your bills are exactly equal to or greater than your net income, you DO have enough to get started. Starting small is better than not starting at all, and if you plan well, you’ll eventually have more to work with.

Reason #5: “My finances are a mess”

This all the more reason to seek out an advisor who can help you sort through and understand your assets. Perhaps you have a 401(k) or several 401(k)s from former employers that has not been rolled over, a couple of savings accounts, a trust from a deceased relative, some stocks that your parents bought in your name when you were younger … a circumstance like this can be confusing, but leaving it as it is won’t improve the situation. Consider speaking with an advisor who can look at your complete financial picture, help you to understand it, and help you to develop a plan to make your “financial mess” work for you.

Reason #4: “The Government will take care of me”

The bottom line is this … there’s a chance Social Security may not be available when you retire, and even presuming it is, it may not be enough to provide your ideal retirement income. If you’re planning to retire on Social Security alone, I would advise you to create a back-up plan at the very least.

Reason #3: “Between my savings and my 401(k), I’ll be fine”

Saving for retirement without an income distribution plan can be a mistake. How will you use that money once you have it? And while you may think you’ll have everything you’re going to need, have you considered inflation? Taxes? And furthermore, some people are living past 90. Will your assets last that long? If you outlive your income, what then? It’s a good idea to look ahead and plan lifelong income.

Reason #2: “I don’t want to think about it”

Many people procrastinate simply because the thought of discussing financial matters (or growing old) is unappealing. I can certainly understand that. But consider this … if you bite the bullet now and put a firm plan in motion, you may not have to think about it again for quite some time.

Reason #1: “I don’t know how”

If you knew everything there was to know about financial planning, you’d probably be a financial advisor yourself. While it is possible to do everything on your own, that generally involves a great deal of research and a huge ongoing time commitment. If you’re putting off retirement planning because you don’t know how, consider speaking to an advisor at Joshua Cumrine Financial who does.

Most places of employment will offer a variety of retirement plans you can choose to make use of. Two commonly asked questions are whether a Roth 401(k) is the same as a Roth IRA retirement account and is either one better than a traditional 401(k) plan.  While there are significant differences, any type of IRA & retirement plan investing is a great idea; for the past 10 plus years the average American actually had a negative savings rate!

The Roth IRA

A Roth IRA and a Roth 401(k) are two very different savings instruments. Both have the same concept however. Basically, you make contributions to plan for retirement. There are no tax deductions for these contributions. Yet, upon your retirement, you can withdraw your contributions and additional earnings tax-free. While it would be wonderful to have a simple answer to these common questions, one type is not necessarily better than the other. It will greatly depend on your personal preferences and circumstances. The right choice for you will depend on your specific situation and expectations.

The Traditional 401(k)

With a traditional 401(k), the employee will contribute a specified percentage of their salary to a plan that is employer-sponsored. Many companies will make contributions to your account, and some companies will even offer a match of up to 100% of your contributions. No contribution that is made to the traditional 401(k) is counted as taxable income. All of the gains that are accumulated in the account are tax-deferred. Upon withdrawal, the amount is taxed as if it were ordinary income. The traditional 401(k) is similar to a traditional IRA account and account owners will have to begin taking withdrawals at age 70 1/2.

Roth 401(k)

When dealing with a Roth 401(k), the contributions that are made by the employer are kept separate. These contributions will receive the same tax treatment as a traditional 401(k).

A Roth IRA does not have a withdrawal requirement. You will never be required to make mandatory withdrawals from the account. Roth 401(k) accounts do have a withdrawal rule, and owners will be required to begin withdrawing when they reach 70 1/2. One way to avoid the mandatory withdrawal rule is to rollover the Roth 401(k) into a Roth IRA retirement account. Keep in mind that Roth 401(k) accounts are available to every worker, while Roth IRAs have an income restriction.

The Roth 401(k) plan has a maximum contribution limit. In 2009, the limit is $16,500. However, there is a $5,500 catch-up contribution that is allowed for workers who are over the age of 50. Combined, employees can contribute up to $22,000 per year into their account.

Contribution Limits: Roth IRA & 401(k)

IRAs have a very significant difference from a 401(k). With an IRA retirement account, the contribution limits are lower. This is because these accounts are not sponsored by your employer. For 2009, Roth IRA contribution limits are set at $5,000. Employees are allotted an additional $1,000 for catch-up, totaling $6,000 for the year if you are over 50. It is possible to have more than one type of retirement account. If you have an IRA and a 401(k), you can contribute the maximum amount to both accounts. Now, the question remains, what’s better, a 401(k) or a Roth IRA?

Choosing Roth 401(k) or Roth IRA

An analysis conducted by William Urban from Bingham, Osborn and Scarborough, indicates that the Roth 401(k) plan “might be the better choice for more people than commonly understood.”

The popular belief is that a Roth 401(k) makes more sense, especially if you are planning to be in a higher tax bracket upon retirement. The analysis showed that if your tax bracket falls in retirement years, the accumulation in the Roth might make that the better choice. This is usually the case if employees can afford to contribute the maximum amount allowed. Many times, younger workers are in the lower tax brackets. This minimizes the immediate tax benefits of the traditional 401(k), making the Roth fund a better choice. 

Regardless of your decision, going with any tax advantaged savings account is critical to save for retirement. More and more people file for bankruptcy because they did not have a large enough savings when a financial emergency occurred such as a sickness, loss of a job, or death in the family.

Savings Plan: Common sense calls for one. Decide what portion of your earnings you would like to save for needs like a college fund for your children, your own house, a health plan to meet any emergencies etc. The idea is not to reserve funds for every possible event, but to ensure that the inevitable is provided for, while also gearing up to deal with surprises.

Wealth Management: Follow a simple strategy – examine your spending, reduce your debt, save, invest in tax deferred savings, determine your long term goals and assess your risk tolerance. Diversify your investments and employ techniques such as ‘dollar cost averaging’ which will reduce impact of market fluctuations. If you have debts outstanding, then managing them is vital to comprehensive financial planning. We recommend to find all the information you need about managing loans of all kinds.

Tax Plan: Taxes often change with successive governments. You cannot foresee all changes, but stay alert to news of tax increases, cuts and exemptions. If you are smart with your moves, taxes will never get the better of you. Tax planning is important both from a personal and business point of view.

Retirement Plan: Start early, plan ahead, invest accordingly. Consider options like an Individual Retirement Account (IRA); if you’re switching jobs, rollover your pension fund from the previous establishment and most important, resist withdrawing prematurely. Look at the product line of to know all you need about the 401(k) rollover plan and other retirement schemes.

Cash Management: Holding on to your cash to meet unforeseen expenses and current obligations, or maximizing investment in liquid instruments may offer comfort, but cash at hand is an idle asset which earns nothing. Good cash management involves accurate budgeting and forecasting of cash flows, borrowing short term when required and investing surpluses as they arise. This applies equally to business. Create a trading budget covering sales, production, material, labor and other costs. Optimize cash flow by balancing credit terms on sales and purchases, financing working capital expenditure and making adequate provision for taxes. Bank overdrafts and short term loans could be used to raise additional funds when needed.

Estate Management: Managing your property investments well is crucial to good financial planning. Although the type of property may differ, depending on whether it belongs to you or the business, you should still look at it as a financial asset. Critically analyze what it cots you to maintain, and whether you can make an income from it, such as leasing it out. Unless it’s a home that’s been in the family for generations, you should always keep your options open to selling property when the market is on a high. Again, wait for cyclical downturns before making a purchase. And finally, ensure you have insured your property against the usual risks. Books on could help clear all your doubts about the legal aspect of managing your estate finances.

Investment Advice: Experts don’t exist for nothing, use ‘em. A diverse financial portfolio is pivotal to comprehensive financial planning. Managing such a portfolio on one’s own is tough. This responsibility should be entrusted to reputed investment advisors who could manage your portfolio, diversify investments, minimize risks and most importantly, personalize it to suit your financial goals.

Risk Management: This is a crucial aspect of comprehensive financial planning. Everyone is looking to maximize returns, and therefore, will have to deal with the higher risk. Making allowances for losses on investments is an absolute must in the financial planning process, whether it is for an individual or a company. A diverse portfolio including stable investments like government securities and other risk weighted options will optimize the risk versus return equation. For risk management solutions refer to

Comprehensive financial planning, as you can clearly see, requires you to examine every aspect of your finances, be it your personal expenses, those of your enterprise or your dependants. Paying close attention to these details will reflect in your finances.

While 401(k) plans have some good points, they also have a down side compared to a self directed IRA. It is suggested that anyone who wants to rollover an old 401(k) change over to a self directed IRA. There are many reasons for this and this article will help explain why it is better to roll over the 401(k) to a self directed IRA. One of the biggest reasons for changing the 401(k) over to an IRA, in the first place, is to allow for greater variety in investment choices. If changing over to a traditional IRA, a big part of the benefit is lost, as traditional types of IRA still have many limits on the type of assets you can invest in. The person rolling their 401(k) over should choose a self directed IRA, as it allows for full control of your money.

All IRAs are better than a 401(k) because 401(k)s are bound to your employer and their investment company. This means the company sets things up for the greatest benefit for itself and not for the greatest benefit of the person who holds the account. A self directed IRA is the best way to go as this type of account has a custodian that guides you through all the pitfalls and the rules, but does not control what happens in the account. When the account holder is not bound by other interests, there is no limit to the investments that can benefit the account holder. In conclusion, a self directed IRA is simply the best choice for rolling over a 401(k).

In most cases, employees have two choices when it comes to saving money for retirement. They can participate in a company sponsored 401(k) program or they may have the other option of participating in an IRA program.

These plans both involve putting money aside (usually a percentage of your income) into a tax-deferred account, but an IRA works more like a personal savings account than the 401(k) programs. With an IRA, when an employee decides to retire, quit, or change jobs, he or she can receive the money saved in an IRA as one lump sum. This is known as an IRA rollover. What the person does with that money is the key to good IRA management.

One thing you can do with the money is to convert it into a more beneficial retirement account known as a Roth IRA. A Roth IRA allows you to borrow against the balance with fewer restrictions than those imposed on a standard IRA. A company-sponsored 401(k) plan, by comparison, places severe restrictions on employee access to accounts.

You do not have to take an IRA rollover even if you retire or leave the company. In other words, you cannot be forced to take the money out of the account. If you wish, the account can remain with the original company until you reache retirement age even if you are working with another company at the time.

For those who want to move their account, most employees have 60 days from the time of termination to re-invest their IRA rollover into a new account or investment plan. There are some issues associated with this, however, so make sure you get expert advice before deciding on what to do.

All IRA account holders should understand that if they elect to keep their account with a former employer and the company goes bankrupt or hits severe financial problems their money may be lost. Keep in mind that often employers change locations over time, and this can make it hard for you to keep up with where they are (and where your money is). By taking the IRA rollover at termination you can transfer the money directly into a new account, reducing your need to keep up with your past employer’s location and financial state.

As mentioned earlier in this article, IRA rules have a tendency to change often and it is your responsibility to keep abreast of what is new and current. If you find that you are facing an IRA rollover, seek the advice of a professional who can show you the options that you have and help you make the best decision concerning where to put your savings.

1. You get more investment choices and opportunity to better diversify.

2. Expenses may be lowered.

3. You can consolidate with other money which makes administration easier.

4. It is oftentimes easier to get if you need for an emergency.

5. Can covert to a Roth IRA if you qualify and if a Roth is appropriate.

6. You no longer have to worry about the financial stability, urge to merge or sale of your ex-company … and this is very important if your plan contains their stock. If your plan contains company stock investigate the tax advantages of rolling the stock out of the plan, paying the taxes on your basis and holding the stock outside the plan OR selling it immediately to get capital gains treatment. You’ll want to consult with a tax professional before acting.

7. Eliminates the chance of lump-sum distribution to beneficiaries in case of your death.

8. Avoids spousal consent if you want to change beneficiaries – of course this could be a disadvantage if you’re the dependent spouse.

9. Better manage the tax liability of your surviving spouse and/or heirs.

10 Ability to convert your money into a lifetime income you can’t outlive.

Here are some disadvantages of moving your 401(k) from an ex-employer:

1. Some states do not give the same creditor protection to IRAs that they do to 401(k)s. If this is important, check your state statutes.

2. If you have life insurance with your ex-employer as part of the 401(k) plan, you may lose it if you transfer the money.

3. If you plan to retire after age 55 but before age 59-1/2 you may have better lump-sum access to your 401(k) than to an IRA.

4. If you have a loan outstanding from your 401(k), it will need to be repaid prior to rolling over into an IRA.

5. You may have access to an investment inside your ex-employer’s 401(k) that will be lost if you roll over into an IRA, e.g., ex-employer stock that you think will continue to outperform other alternatives you could have.

6. Loss of spousal consent to change a beneficiary.

The roll over of your 401(k) plan at an ex-employer to an IRA makes a great deal of sense in the majority of cases; however, there could be circumstances that might make it better to stay put. Rolling over your pension money from an ex-employer should be undertaken with the advice and counsel of a financial professional that specializes in retirement planning. The process of assessing your options is fairly straightforward and, if action is needed, rolling over is easy and painless. If you are staying put because of loyalty to your lifelong employer, your sentiments are to be complemented; however, when it comes to your retirement savings, your first loyalty must be to you and your family. Most retirement planning professional agree that “money in employer-sponsored plans should go with you when you the leave the company”.