January 2013 > Retirement Corner
How to Avoid Your Own Personal Fiscal Cliff
If you haven’t yet begun to focus on saving and investing for your future, there is no better time than now. The sooner you start, the greater your chance of reaching your financial goals and avoiding a personal fiscal cliff at retirement.
Your Options for Retirement Savings
As an employee of the University of Texas System, you already participate in a mandatory retirement plan. However, there will almost certainly be a gap between the income your mandatory plan provides and the income you will actually need to maintain your lifestyle. Fortunately, the UTRetirement Program offers a solution to bridge this gap and avoid the cliff.
The UTSaver 403(b) Tax Sheltered Annuity (TSA) and the UTSaver 457(b) Deferred Compensation plan (DCP) both offer participants an opportunity to save for retirement through regular, automatic payroll deductions. Even starting with amounts as low as $15 a month could help build security and peace of mind.
Your Choice on Handling Taxes
Both the TSA and DCP plans allow you to contribute your funds on a pre-tax basis. This means if you are in a 20% Federal Income tax bracket, for every $100 you contribute, you only realize an $80 deduction in your final check. This also reduces your taxable income at the end of the year. For participants who want to pay taxes now, you can elect the Roth TSA, in which you pay the full taxes now so that no taxes are due at the time you make a qualified distribution (at or over age 59 ½ where the account has been open for at least 5 years).
There's No Better Time to Get Started Than Right Now
With the start of a new year, make a resolution to protect and reward yourself. Start saving now for a secure fiscal future.
To learn more, please visit our website at: www.utretirement.utsystem.edu.