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Fifth Step to Creating Your Financial Plan: Investing in Your FutureFinancial Solutions

Congratulations! You’ve gotten your budget in check and established a six-month emergency fund – that’s no small feat! And if you’ve come this far, you should have no lingering monthly payments except your mortgage.

You may think you now have your finances under control, but what about planning for the future? How much are you saving for retirement? Dave Ramsey of Financial Peace University™ suggests saving 15% of your gross income. That may sound like a big chunk, but it’s important to set aside money for your golden years.

Why is 15% the Magic Number?

In general, it’s recommended to save between 10-15% toward retirement. However, the experts have taken inflation and rates of return into consideration and there is a big difference between 10% and 15% long-term. You could have at least $500,000 more when you retire if you up your savings by 5% (depending on interest rates and inflation)! Every situation is different though, so you will also need to consider your current age and unique retirement goals.

Once you’re ready to commit, talk to your financial advisor about the best ways to save. Here are a few of the common options.


Many employers offer 401(k) plans, and they have several perks. First, you contribute to a 401(k) with pre-tax dollars, so that means you pay no taxes on the money until you make qualified withdrawals in retirement. Second, your employer may match your contributions – that’s like free money for retirement!

Ramsey suggests investing in a Roth 401(k) to avoid taking a tax hit later in life when you will likely be in a higher tax bracket. If this option isn’t available through your employer, check out the investment options available through a Financial Advisor like those at WPCU.*

Traditional and Roth IRAs

Individual Retirement Accounts (IRAs) can be used as an additional savings tool or as your primary retirement plan if you don’t have a 401(k). There are two types available: Traditional and Roth.

The main advantage of a Traditional IRA is that you may be able to deduct the amount of your contributions from your gross income before your tax bill is figured. For example, if your income in 2013 is $40,000 and you contributed $3,000 to your IRA, your income tax would be figured on $37,000.

Another advantage is that all growth of your IRA is tax-deferred until you begin withdrawals if you follow the requirements. This means you don’t pay taxes on the funds until you begin withdrawals in retirement (any withdrawals made prior to age 59 ½ may be subject to an early withdrawal penalty).

With a Roth IRA, you contribute after-tax money, so qualified distributions are generally tax-free once you retire. (Any withdrawals made prior to age 59 ½ may be subject to early withdrawal penalties).

Ask the Professional

Planning for retirement can be complicated and your needs will change over time. Don’t put off saving for the future! You can schedule a free, no-obligation appointment with one of the Financial Advisors at Wright-Patt, available through CUSO Financial Services, L.P. (CFS)*. Learn more and schedule your appointment today!

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor.  Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Wright-Patt Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.


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