Credit Life 2

How IRAs Help You Retire On Your Own Terms

When should you start and what's the best option?

The average American between the ages of 35 and 44 has just over $22,000 dollars saved for retirement. For people who are entering their prime earning years, this is far too low. If you want to retire at age 65 and live on $50,000 a year, you’ll need about 15 times that much, assuming you live to the average age of 72. For most Americans, retirement seems like an always-distant horizon. They can always see it, but they never quite have enough money to reach it. As a result, they end up working long into their 70s.

There is a way you can save more for retirement, while also saving on your tax bill and earning interest on your investment. It’s called an Individual Retirement Account (IRA). It’s a managed investment account, like a mutual fund, that will grow your wealth so you can enjoy your retirement.

If you work for a large company, you may have something like an IRA: a SIMPLE IRA (Savings Incentive Match Plan for Employees) or a 401(k). Even if you’re maximizing your contributions to these programs, you can still use an IRA from your credit union. The extra money you save in an IRA can pay for the things you’ve always wanted to do. You can spend your retirement traveling the world or going back to school. All you have to do is start planning now.

Successful investing in an IRA is more about starting early. If, at age 18 you deposit $5,000 into an IRA and it earns 8% per year, you will retire with $164,000 dollars, assuming you make no other savings. Doing the same thing at age 39 will build a nest egg of a mere $40,000. The key to successful retirement savings, then, is good and early planning.

The deadline for contributions to count against your tax burden is traditionally on tax day, around April 15th. The time to start investing in a brighter retirement future is now. Let’s take a look at some benefits of investing in an IRA:

IRAs come in two forms: Traditional and Roth. A Traditional IRA is tax-deferred. You don’t pay taxes on the money you put into a Traditional IRA. Instead, you pay taxes on your withdrawals. If you’ll have less income after you retire, a Traditional IRA can save you money on your tax bill.

You fund a Roth IRA with post-tax assets. You invest in a Roth IRA with your post-tax salary. Then, you don’t have to pay taxes on the withdrawal. Roth IRAs make the most sense for people who expect to draw a significant post-retirement income. If you expect to have a significant pension or plan to start a profitable small business when you retire, a Roth IRA might be best for you.

The best part about retirement savings with an IRA is that it requires little direct management. You can set up direct deposit from your paycheck to your IRA, allowing you to grow your savings over time. You’ll receive a monthly statement, just like you do from your checking account. It will show you how much your investments have grown.

IRAs are also professionally managed. A full-time financial analyst directs the growth of the fund. Your retirement savings are in the hands of a professional who knows the ins and outs of the market and can make your money work for you. Rates of return on IRA’s tend to be higher than CDs or savings accounts. This higher return can make sure you have enough money saved to enjoy your retirement.

IRAs offer some flexibility. Withdrawals before retirement incur a tax penalty and other fees, but the money in an IRA is accessible in the case of emergency. You can also change the size of your contribution month-to-month. This flexibility means you can take advantage of sudden windfalls or expenses.

IRAs are large, managed funds. They can take advantage of economies of scale that are unavailable to individual investors. Managers working with more capital can make safer investments while maintaining good returns. Trying to manage your own retirement investments limits you to working with just the money you have. Investing in an IRA at your credit union allows you to use the added savings power of your entire community.

Relying on Social Security or other guaranteed income for your retirement is not a good idea. The demands that are placed on these programs keep going up and contributions to them keep going down. It doesn’t take a professional financial analyst to see that these trends can’t go on forever. Take charge of your financial future, and do it now. Make an appointment with the helpful professionals at Listerhill Financial Services and start taking charge of your financial future!

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Frequently Asked Questions

  • Which loans are eligible for Skip-A-Pay?

    Auto loans, recreational loans, and personal loans that have not had Skip-A-Pay applied to them within the last year are all eligible for Skip-A-Pay. This includes boat loans, RV loans, 4-wheeler loans etc. However, home loans, Christmas loans, credit cards, and other lines of credit are not eligible.


  • When should I request Skip-A-Pay?

    In order to have your Skip-A-Pay request processed before your loan payment is due, please submit your skip request five (5) business days in advance of the scheduled payment date.

    Example: If your next loan payment is due on June 20th, you would need to submit your request no later than June 12th.

    Skip-A-Pay may only be used once a year.

  • How do I request Skip-A-Pay?

    Click here to request Skip-A-Pay, agree to do business electronically, and fill out the online form. You must also provide payment for the $25 fee before your loan payment can be skipped. This fee can be transferred from your Listerhill checking or savings account or paid from an outside account.

  • What is Skip-A-Pay?

    Skip-a-Pay is a service by Listerhill Credit Union which allows members to request to skip a monthly payment. The payment is instead added to the end of a loan, essentially extending the life of the loan by one month. This can be a valuable tool in your financial tool belt.

  • What loans are not eligible for Skip-A-Pay?
    1. Real Estate Loans (1st and 2nd Mortgage and Home Equity Lines)
    2. Business Loans
    3. Lines of Credit (Kwik Kash, Anytime Credit, Overdraft Protection, and Credit Cards)
    4. Christmas Loans
    5. Single Pay Term Loans
    6. Loans with Less than 6 Monthly Payments
    7. Loans Currently Past Due More than 10 Days
    8. Loans that Received Maximum Extensions (six skip pays and/or extensions allowed during the term of the loan)
    9. Workout Loans or Troubled Debt Restructuring (TDR)
    10. Accounts in Bankruptcy
    11. Charged-Off Loans
    12. Loans on Accounts with a Negative Checking or Savings Balance
    13. Accounts with Bad Addresses
    14. Loans that have already had Skip-A-Pay applied to them within the last year.