• Shane Zimmer

How to Maximize my Retirement Savings?

It's good to be back! It's been a long time coming, and I’ve missed writing these for you readers, thus this makes me feel exquisite to be writing again. Quick back story of where I have been: I was studying for certain licenses in order to begin my career as a financial advisor and thankfully I passed. Now that that's out of the way, let's get into this banger. When we are thinking of retirement, whether it be early or later in life, what the blank should we do? You’re probably wondering, how do I retire without any worries? How do I become financially free? Or, Shane, I know I should invest in stocks and bonds, but what else am I to do? The answer is: IRAs. Don’t worry, I’ll explain.

We’ll start with IRAs. There are quite a few different types, yet the two known ones are Roth IRAs and Traditional IRAs. IRAs themselves are simply retirement vehicles which will aid you by providing essentially a nest for your eggs to grow in. They feature tax advantages, investments, and much more. Lets jump into what's the best option for you though. In both these examples, we’re going to examine a person who makes a reasonable income, let's say $60,000, lives on Long Island, and has just graduated college. Both Traditional and Roths will allow our individual to meet the requirements of investing, yet if he made $207,000, and was married, he would not be able to invest in the Roth but could invest in the Traditional. Anyone at any income level can invest in a traditional IRA. When it comes to contributions to the account, traditional IRAs will allow you to lower your AGI taxable income, thereby allowing you for generous tax advantages we wouldn’t have had earlier. Yet, with withdrawals, they are taxed as taxable income at retirement. The difference between the two is that the Roth will not allow for such advantages, yet withdrawals are tax free. For our specific individual, presumably 23 years old, the traditional seems to be the better choice as he is far away from retirement, and I’d assume he has some form of student loan debt, so the AGI tax level he will be lowered to will allow for advantages within student loan payment deductions.

Aside from IRAs, what else am I to do? Well, I have always considered proposing this idea to more and more people who ask for my advice: REITs. REITs stands for Real Estate Investment Trusts and it's exactly what you’d think they are. They are companies which own, and operate specific income building real estate. They are similar to ETFs, exchange traded funds, as REITs trade on the stock exchange like a normal common stock, yet there are requirements for these trusts. 75% of all assets must be kept in real estate activity, cash, or US treasuries. Must pay 90% of taxable income in the form of shareholder income each year, dividends. Another big one is that the REIT must have at least 100 shareholders after year one to continue operations. REITs are an interesting choice as they provide opportunities for lesser income producing individuals to invest in real estate.