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Question for the Money Doctors

Question submitted on May 20, 2013.

Question

Due to a disability, I am unable to work and have had to retire at 49. Given the economy and my future earnings capabilities (doctors say that any employment would have to be part time) do you have any suggestions as to what would I need to do in order to save more money for the future. Would an Individual Retirement Account be something that I should consider? Thanking you in advance.

Answer

It is never too late to save for the future. I would suggest you look for part-time employment that offers a retirement savings program, with or without employer match. Defer as much as you can into a 401(k) or similar account (such as a SIMPLE IRA) and you will also reap the benefits of a tax break. If your income tax bracket is very low and the employer offers the Roth option within the 401(k), you may want to consider that since the tax break won't yield much benefit unless you are in a high tax bracket. If there is no retirement plan available, you could have your pay wholly or partially deposited directly into an IRA or other investment account. A Roth IRA might be appropriate here as well if you are in a low tax bracket.

Be careful to not invest too conservatively.Seek the assistance of an investment advisor who can help you allocate your funds in a way that is financially beneficial, yet meets your risk tolerance, time horizon, goals and objectives.


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