Tax time is the perfect time to plan for retirement

Published on Wed, Mar 7, 2012
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Every year, tax time serves as a reminder of financial progress. Before the big April deadline rolls around, most of us spend time gathering documents, reviewing accounts and meeting with financial advisers. All of this effort is centered around getting a firm grasp on what you earn, save and invest.

What many don’t realize is that tax time preparation can be beneficial for more than one reason. Consider this: Many of the same documents, papers and files you go through to complete your taxes are the same documents you need for assessing your retirement preparedness. Whether you’re just starting out or nearing retirement, knowing where you’re at is critical to your financial well-being.

Conducting an annual checkup for retirement is not only smart financially; it can also give you added peace of mind, which is something investors need now more than ever. In fact, a recent survey released by TD Ameritrade found that while the majority (85 percent) of working Americans have an Individual Retirement Account (IRA) and/or a 401(k)/403(b) plan in place, many are not confident they’ll have enough saved when they’re ready to retire. Just 23 percent surveyed said they are completely confident they will reach their savings goals by the time they retire.

“People want the comfort of knowing that when they retire, their money will last. However, in order to achieve this, planning is required,” says Lule Demmissie, managing director, investment products and retirement, TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation. “It’s important for investors to remember that there are more educational tools and resources available today than ever before to help them develop a sound retirement plan. Breaking up the planning process into phases can make the task seem less daunting, and tax time is a great time to get the process started.”

Whether you’re going it alone or working with a professional, keep these tips in mind to maximize your time this tax season:

-Conduct a retirement assessment. Tax documents and end-of-year statements will often give you the clearest, most up-to-date snapshot of your finances. Use that information to assess your retirement progress and analyze these documents to determine if you should consider updating or altering your strategy.

-Formulate or refine your plan. There are a wide range of financial considerations concerning your income and expenditures that need to be taken into account as you save, all of which should factor into your overall plan. Make use of online resources such as retirement calculators, which can help you refine your approach to retirement investing.

-Take action! Once you’ve assessed your situation and devised ways to strengthen your retirement plan, put your strategy in motion. The sooner you get started, the sooner you can make progress toward achieving your goals so you can be more secure about the future.