Frequently Asked Questions on Your IRA Account
Written by Gloria Zhu   


1. What will my Social Security retirement benefit be?
Calculate what you can expect as your Social Security retirement benefit and more.

2. How much do I need when I retire?
Use this calculator to get an estimate of what you'll need to have available at retirement to live as you'd like. Although this is a popular question, the answer is rather subjective because everyone’s needs are different.

3. What is the Rule of Thumb Method?
One common rule of thumb states that you will need about 80% of your pre-retirement income during retirement. So, if you are earning $50,000 a year just before you retire, you can estimate that you’ll need around $40,000 of income in retirement. Although this is not entirely reliable, it is an option to help you reach a basic idea.
 
4. What is the Detailed Expense Method?
This method may be a good starting point for younger people, but as you approach retirement it is important to take a serious look at how much money you’ll really need. The best way to estimate how much money you’ll need is by looking at your expected income expenses in retirement.
 
First, identify your retirement income sources. What is your estimate Social Security benefit? Will you be receiving a pension? And how much will you have saved for retirement? Then, think about what your expenses will look like. Will you still be paying off your mortgage in retirement? Will you be moving or making any large purchases? What is your life expectancy and how long does your money need to last? And then don’t forget to account for inflation.
 
Once you start to accumulate your monthly expenses in retirement, even if they are just estimates for now will help you begin to see how much money you’ll need to have to cover these expenses. You may find it’s much less than expected, or it could be even more than expected. From there you can consider what your projected retirement income will be and see how much of a surplus or deficit you have.

5. What kind of IRA best suits my needs?
Both the Traditional and Roth IRAs have significant tax advantages, but in some situations one may be better than the other. To learn more visit information on Traditional IRA or Roth IRA.

6. Where and how should I invest my IRA?
We can't give you advice about specific investments but this Securities and Exchange Commission information about investing will help you get started on making sound investment decisions and answer questions that may come up through the years you are managing your IRA.

7. Can I change the beneficiary on my IRA?
Yes, to change the beneficiary(ies), complete an IRA Change of Beneficiary form.

8. Is my IRA account covered by Federal Deposit Insurance Corporation (FDIC) insurance?
Yes, the FDIC ensures checking, savings, trust, certificates of deposit (CDs), and IRA retirement accounts.

9. What do I do when I don't have enough?
If you do not have enough saved up, take action immediately because everything counts.
If you still have a few years until retirement, consider beefing up your 401(k) plan or IRA contributions. The longer your money has to grow, the better off you'll be. Compound interest is extremely helpful, so don't let time pass you by.

For those who may already be ready to retire, the added savings might not be as effective. It can help, but you may find it is better to delay retirement a little or delay Social Security. You might be surprised at how much another year or two of work can help your situation. It might not be ideal, but when you factor in the money earned plus potential benefits such as health insurance, it could be more than worth it.

10. Can my IRA be rolled over into other retirement funds? What about the other way around?
An IRA can be rolled over into other retirement plans, such as 401(k). On the other hand, almost all other retirement funds can roll into IRA.



 
Last Updated on Wednesday, 22 December 2010 06:25