Whether you’ve been working for five or forty-five years, you’re likely to have spent your fair share of time dreaming about retirement. Planning for retirement, on the other hand, is rarely as fun as dreaming about it.
There are many ways to save for retirement and plenty of plans to help do it. For many people, trying to sort through the options is overwhelming, leads to hasty decisions or, even worse, failing to plan for retirement at all. At Benefits & Financial Strategies in Flagstaff, AZ, our goal is to make sure everyone understands their options and has the tools they need to achieve their financial goals.
Retirement Services For Families and Individuals in Flagstaff, AZ
Individuals and families planning for retirement in Flagstaff, AZ, have plenty of retirement planning options. Many businesses offer employer-sponsored retirement plans (ESRPs), such as 401(k) plans, and match a percentage of employee contributions. Though your investment options within these plans are limited by the administrator, contributing at least enough to receive the full employer match is a smart way to boost your retirement savings.
You’re entitled to receive funds from ESRPs upon retirement. However, while it was once commonplace to spend your entire career with one employer, modern career paths rarely fit this mold. As a result, many workers approach retirement age with savings scattered among previous employer plans, unaware of how much they have saved.
A smarter approach for the modern workforce is to roll your retirement funds into an Individual Retirement Account (IRA) when you leave a job and manage all your funds from one place. IRAs are also smart investment vehicles for the self-employed and even full-time employees looking to boost their retirement savings beyond annual ESRP limits.
To figure out how much you’ll need in savings when you retire, you can run through various scenarios using an online retirement calculator and explore some of your retirement savings plan options below.
Traditional and Roth IRAs
Traditional and Roth IRAs are popular individual retirement accounts. In 2021, individual IRA contributions up to $6000 ($7000 if you’re over age 50) are tax-deferred until you withdraw them. Individuals in Flagstaff, AZ, who meet income requirements can also establish and contribute to a Roth IRA. Roth contributions don’t reduce your tax liability now but are tax-free when withdrawn in retirement.
Simple and SEP IRAs
SEP IRAs (Simple Employee Pension IRAs) are employer-funded retirement accounts popular among Flagstaff, Arizona’s self-employed. These plans have much higher annual contribution limits than other tax-deferred accounts (for 2021, the lesser of $58,000 or 25% of employee compensation). SIMPLE IRAs (Savings Incentive Match for Employees) are another option for self-employed individuals. The 2021 SIMPLE IRA contribution limit is $13,500, or $16,500 for individuals over 50.
Fixed and Variable Annuities
Annuities are another investment vehicle available to individuals and families in Flagstaff, AZ. When you purchase an annuity, what you’re purchasing, in essence, is future income. With fixed annuities, your tax-deferred investment grows with a set interest rate. Meanwhile, variable annuity policyholders earn a return that varies based on their investment selections.
Retirement Services For Employers in Flagstaff, AZ
Business owners in Flagstaff, AZ, can attract and retain top talent by offering competitive benefits, including employee retirement and pension plans. While pensions reigned supreme for many years, today’s popular employer-sponsored retirement plans reflect the modern workforce’s changing needs.
It’s clear how employees benefit from ESRPs, but many retirement vehicles add significant value for employers, as well. Not only can business owners save for their retirement in these accounts, but they can receive tax benefits by making matching contributions to their employee's accounts.
Pension, Profit Sharing, 401(k) Plans, 403b Plans
These employer-sponsored retirement vehicles share an intended outcome but achieve it in different ways. Most pension plans require employers to make contributions for all vested employees every year, which employees receive upon retirement via a lump sum or fixed monthly annuity. Profit-sharing arrangements split a portion of company profits between eligible employees, which may be disbursed at retirement or rolled into a retirement account.
Other popular retirement vehicles that Flagstaff, Arizona employers offer are 401(k) and 403(b) plans, which combine tax-deferred employee contributions and matching employer contributions to help employees save for retirement. Though similar in structure, for-profit companies offer 401(k) plans, while government and non-profit employers provide 403(b) plans.
Cash Balance Plans
Employers offering cash balance pension plans credit a percentage of each eligible employee’s yearly compensation to an account designated for their retirement. Cash balance plans are a type of defined-benefit plan, so they carry less risk than many other types of retirement plans and will earn an annual interest credit at a predetermined rate. At retirement, employees receive either a monthly annuity or lump sum.
Buy/Sell Agreements protect a business from incurring losses related to the death or disability of one of its members. The most common types of buy-sell agreements are cross-purchase agreements and stock-redemption agreements. After the death or disability of a key employee, a cross-purchase agreement gives other key employees the option to buy their ownership interest. Under a stock purchase agreement, all key employees and the business establish an agreement under which the company agrees to purchase deceased employees' ownership shares.
Simple and SEP IRAs
For many small businesses in Flagstaff, Arizona, SIMPLE IRA plans are a less-complicated and less-expensive alternative to the common (and complicated) 401(k) plan. SEP-IRA plans are uncomplicated and relatively easy to administer. Unlike 401(k) and SIMPLE IRA contributions, employers make all SEP IRA contributions on behalf of employees. You can establish and contribute to a SEP IRA until your tax filing due date (typically April 15, unless you’ve requested an extension.)
Deferred Compensation and Defined Benefit Plans
Qualified deferred compensation plans, such as a 401(k), are what most think of when they think of retirement plans: Many employers in Flagstaff, AZ, also offer non-qualified deferred compensation plans. Non-qualified deferred compensation plans carry more risk than qualified plans and are typically offered solely to executives and other high earning employees,
Defined benefit plans are more commonly known as pension plans. Unlike most retirement plans, defined benefit plans guarantee a specific payout or benefit at retirement and are entirely employer-funded and managed.
Succession planning services help Flagstaff, AZ, business owners sort through the complicated and sometimes emotional process of planning for their business’ future after their retirement or in the event of a tragedy. Effective succession planning also helps ensure you retain enough of your company’s assets to retire and provide for your family while planning for the successful transfer of ownership to your heirs, employees, or outside buyers.
Flagstaff, AZ, business owners want to provide their executive teams with valuable and competitive benefits packages to keep them focused on the company’s success. The US Department of Labor regulates executive compensation plans. Executive benefits planning services help employers understand and navigate eligibility criteria and design qualified or non-qualified executive benefit plans to meet their needs.
Have A Question About Retirement Plans? Talk With A Professional Today.
It’s easy to get lost in the complexity of various retirement planning vehicles. That’s why Benefits and Financial Services offers financial and retirement planning services to help Flagstaff, AZ individuals, families, and employers sort through their choices and make the best decision for their future.
We develop enduring relationships with our clients so we can truly understand and help them achieve their goals. Our team has decades of experience helping Flagstaff community members just like you save for a successful retirement. If you’re planning for retirement or want to help your employees save for their futures, contact us today. We look forward to working with you.