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When To Start Saving For Retirement And The Mindset Behind It

Experts offer advice on retirement plans, investments, tax law, and when to start saving for retirement. The way you tend to think about and approach a topic, such as retirement savings, is your mindset. Is your retirement mindset that of a gamer, or do you have a business mindset? When you reach retirement age, will you have enough retirement savings? When’s the best time to start saving for retirement? 


This article addresses important issues and makes you think. Consult experts, including financial planners, investment advisors, certified public accountants (CPAs) at public accounting firms for tax advice, and your attorney, when necessary. Ask these experts about proprietary or recommended online retirement calculators. Make sure you’re on the right path. Will you get all of the tax deductions that you’re entitled to on your tax returns? Keep saving or start saving. And track your retirement savings progress. 


Factors that impact retirement savings

You may be a small business owner or an accountant or financial manager working for a company of any size. When you got your business, finance, or accounting degrees, you learned the basic concepts of the time value of money, risk, economic cycles, consistency, accounts receivable, and cash flows. When preparing financial statements using financial accounting practices,  management accounting or cost accounting, and financial planning and analysis (FP&A), you deal with variance analysis or plan vs. actual results. That makes you uniquely qualified to build your retirement savings. Remember that one of the basic accounting principles is consistency. Apply that concept in a different way to create your retirement savings. Strive to save consistently (every paycheck, every month, and every year). 


Retirement Age and Social Security

The U.S. government has established tax law enforced by the IRS that covers the share of  Social Security taxes (FICA) paid by your employer (6.2%) and your share (6.2%) collected through your paycheck or estimated tax payments (12.4%) if you’re self-employed. There’s a cap on the wages of employees or net income of self-employed ($132,900 in 2019) on which you make Social Security contributions, based on tax law provisions applicable to the tax year. 


Some entities aren’t required to pay into Social Security. For example, according to the non-profit newsroom, The Texas Tribune, a few states like Texas only pay into the teacher’s retirement fund (TRS), not the Social Security fund. Therefore, the teachers only receive pension benefits and not Social Security income from the state of Texas. Know whether you’re paying your share of Social Security taxes and if you will receive social security benefits upon reaching retirement age. 


You can start taking reduced Social Security benefits (75% of benefits) at age 62 (unless you have a disability that would qualify and approve you for Social Security benefits earlier). You can currently receive full Social Security retirement benefits between the ages of 66 and 67, depending on your year of birth. If you wait to claim Social Security benefits until a date past your retirement age, up to age 70, you can receive an increased amount of Social Security retirement benefits each month. Increases depend on the amount of time that you wait to start receiving your Social Security benefits. Consult your tax advisor for your situation and that of your spouse, if applicable. 


Some experts cast some doubt as to whether Social Security is adequately funded to provide benefits to younger workers upon retirement. Congress can pass laws providing additional funding to ensure it will be able to  pay Social Security’s benefits beyond a particular year in the future. It’s increased Social Security benefit payment capabilities before by raising the retirement age from 65 to 66 through 67. If the U.S. government isn’t able to pay Social Security benefits to retirees in the future, you’ve got even more incentive to save for retirement. 


Of course, you can work beyond retirement age to add to your savings. Consult your certified public accountant to discuss tax implications for your retirement planning, including the taxability of your Social Security benefits. 


Types of retirement savings vehicles

If you’re employed by an organization, you may be offered an old-style defined benefit plan. Pensions are usually provided by the oldest and largest corporations, by unions, and by governmental entities. Because defined benefit pension plan costs and liabilities are so high, many companies choose to offer defined contribution 401(k) plans to employees instead. Your company may have the policy to match a percentage of your contribution to a 401(k) plan, adding extra money beyond your contribution to your retirement account. 401(k) plans are a valuable employee benefit. Your 401(k) contributions are limited to a certain amount ($19,000 in 2019) to qualify for employee salary deferrals. You make your 401(k) contributions with pre-tax dollars from your paycheck, so your money goes further. Your pre-retirement contributions and your investment earnings become taxable upon taking mandatory minimum distributions (withdrawals) starting at age 70 ½.  If you make some types of early withdrawals, you will be charged a tax penalty. 


Your company may also offer other ways to build retirement savings. These include profit sharing, employee stock purchase programs for public companies, stock options, restricted shares, or deferred compensation, such as annuities.  Some of these employee benefits are offered outside retirement plans


Even if you have a 401(k) plan through work or you are self-employed, you can contribute to an IRA account on your own. IRA contributions require earned income. Two types of IRAs are traditional IRA plans and Roth IRA plans. The annual amount that you can contribute to your IRA is limited (up to $6,000 in 2019). If you’ve reached age 50 or over, you can contribute $1,000 extra annually to an IRA. Tax law defines the limits to the IRA contribution amount and provides for increasing the limits (but not the $1,000 for age 50 or over)  in future years through indexed cost-of-living-adjustments. 


Traditional IRA plans use pre-tax money and contributions are deductible on your tax return. Like 401(k) plans, they are subject to taxable mandatory minimum distributions beginning at age 70 ½.  


For Roth IRA plans, you pay taxes on your plan contributions. You can look into converting a traditional IRA to a Roth IRA if you pay the taxes. Eligibility for Roth IRAs depends on your income and tax filing status (single, married filing separately, married filing jointly, qualifying widow(er), or head of household) because income phaseouts apply.  If you establish a Roth IRA account and hold the investment for at least five years, the earnings will not be taxed. (You paid taxes on your Roth IRA contributions.) Your beneficiaries may get this tax-free benefit for their life too when they inherit a Roth IRA. 


If you’re self-employed, ask the experts about the various types of retirement plans that you can establish. 


The total savings that will fund you in retirement will include amounts outside your retirement plans, like cash, real estate, stock and bond investments, collectibles, or other assets. 


This article presents limited general information that should not be relied upon to make retirement, tax, legal, and investment decisions. Consult qualified experts like your financial advisor, a financial planner, attorney, and certified public accountants in public accounting firms for specifics applying to your situation for retirement, legal, and tax advice. They will also advise you on the types of investments that are suitable for retirement accounts.


When to start saving for retirement

Some experts advise people to start saving at the age of early 20s. The longer your time horizon, the more time for your money to grow through investment. All retirement experts recommend that you start now if you haven’t already started saving for retirement. If you get a late start, contribute as much as you can afford within allowable plan limits to increase your retirement savings. And save outside your retirement plans too. 



You can choose from at least two different retirement planning and contribution mindsets. Will the mindset be the opportunistic, risk-taking gamer or an intelligent and successful businessperson? 


Gamer Mindset

Have you seen the Jumanji movies? Do you plan to see Jumanji: The Next Level in December 2019? In Jumanji: Welcome to the Jungle (2017), teenagers find an old video gaming console, get magically transported inside a game as characters who need to perform tasks, and exit the game to go back to their real lives. Along the way, they encounter wild animals, snakes, and other obstacles. (Your real life can have its twists and turns that will affect your retirement savings.) The original Jumanji Movie (1995) featured a board game. The Jumanji characters take risks, encounter dangers, consider approaches as they go, and hope for the best to win the game. Think about that. 


Or, if you’re a gamer, try simulating retirement strategies by playing Robert Kiyosaki’s CASHFLOW game. It will give you great insights into possible retirement planning investments and productive spending patterns. Do you waste money by buying non-essential “doo-dads”? Is all of your earnings through work, or will you create passive income streams that work for you to supplement your retirement income without requiring much of your time? You can use this useful gamer mindset as a secondary mindset, even if your primary mindset is a business mindset.

Business Mindset 

If you’re in accounting, finance, own a business, or are self-employed, you understand the business mindset. You use business and financial planning and variance analysis in your business life. The company has goals. You prepare financial statements, then compare the actual results with plan, and make necessary course corrections using that financial information. 


When you apply the business mindset to your retirement planning, ask yourself these questions:

  •  “Where am I?”
  •  “Where do I want to be?”
  •  “How do I get there?”


 You track results through periodic personal financial statements to answer the question, “Where am I?” again. Compare actual to plan and analyze variances. If you see unfavorable variances, adjust your actions to get back on track. Ask yourself these questions: 

  • “Do I need to correct course to reach my goal?”
  • “Will that require assuming more risk?” 
  • “Is that risk manageable and worth taking?”


When you track your results over time through periodic personal financial statements, know that ZarMoney accounting software is a very useful tool for this purpose. When you click the Get Started Now button, you can try ZarMoney without providing your credit card information. You may be able to use the software for free to prepare your personal financial statements.  



Using your business mindset to achieve your retirement savings goals is a good approach. Start saving as early as possible. Assemble an expert retirement planning team to guide you. Track your progress with ZarMoney accounting software. Make any adjustments within your acceptable risk profile to help you increase your retirement savings

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