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Retirement Planning in Des Moines: How to Get Started

Whether retirement is in the distant future or just around the corner, when it comes time, we want you to be prepared so you can enjoy it with no regrets. And it all starts with a plan. At Compass Financial Services, our Des Moines-based financial advisors specialize in retirement planning and can help guide you on the path to retirement.

No matter your life stage, now is the right time to think about your retirement plan. And there’s no one-size-fits-all solution to planning for retirement. That’s why our retirement advisors in Des Moines take the time to get to know you and your goals before putting together a financial planning strategy tailored to you. Learn more about our retirement planning process, our retirement advisors and our top tips for getting started!

Types of Retirement Plans & Strategies

To start, it is important to consider that retirement is not an age, but a financial number that allows you to retire with the life you want, and having a plan will help get you there. By determining what that target dollar amount is for you, we can develop a plan to help you pursue it. There are a few common retirement plans that may end up being part of your overall financial strategy. Each has unique benefits, and our Compass Financial retirement advisors will help configure the right mix for you.

Employer-Sponsored Retirement Plans: 401(k), Roth 401(k), 403(b) and Pensions

Employer-sponsored plans are benefit plans provided by organizations to their employees at no or relatively low cost to the employees. They cover an array of services including health care plans and retirement savings plans. Employer-sponsored retirement plans such as a 401(k) and Roth 401(k) offer employees a convenient way to save money for retirement while benefiting from tax breaks. In some cases, an employer may even provide matching funds. So, what’s the difference in all of these plans? We’re glad you asked.

401(k) Plans

A 401(k) plan is a common retirement plan that employers often offer. It allows employees to dedicate part of their salary to a retirement account. Typically, investments are made up of stocks, bonds or mutual funds based on the employee’s choosing. Any pre-tax dollars you contribute to your 401(k) will reduce your taxable income. Your employer may also offer other benefits depending on the plan. For example, some employers may allow for Roth 401(k) contributions, meaning you are contributing after-tax dollars, and in other cases your employer may even make a matching contribution.

Roth 401(k)

The main difference between a Roth 401(k) retirement plan and a traditional 401(k) plan is that Roth savings occur after tax instead of the pre-tax contributions employees make in a traditional 401(k). In a Roth 401(k), the contributions you make are after-tax dollars and, although you aren’t receiving any tax benefits at the time of contribution, when the money is taken out in retirement, it’s tax-free. Something to keep in mind is that Roth 401(k)s are subject to required minimum distributions (RMDs). It is also important to know that in order to make a “qualified” withdrawal from the Roth 401(k) and avoid a 10% IRS penalty tax, you must be contributing to the account for at least five years and be at least 59 ½ years old.

403(b) Plans

403(b) retirement plans, also known as tax sheltered annuity (TSA) plans, typically take the form of annuity contracts or mutual fund custodial accounts, and are offered to people who work at tax-exempt or not-for-profit organizations. These may include hospitals, schools and other educational institutions. This retirement plan is very similar to a 401(k) plan in that they have the same contribution limits, both require you to reach age 59 ½ before withdrawing from them, and they can offer Roth options. Contributions to 403(b) retirement plans are tax deductible and employers can offer to match contributions.

Pensions

A pension is a retirement plan that provides a monthly income. A formula is used to determine that income and is calculated based on the number of years you’ve worked with the company offering the pension, your age, and your compensation. Essentially, the more years you serve, the more money you’ll receive through your pension. Some pension benefits are subject to a vesting schedule. For example, you may have to work for the employer a minimum of five years to be eligible for a pension. With a pension retirement plan, your employer bears all of the risk and responsibility of funding and managing your retirement income. Government organizations typically offer pensions, however not all employers do. In fact, many companies have stopped offering pension plans in recent years.

Retirement Plans You Can Open Outside of An Employer Sponsored Plan: Roth & Traditional IRAs, Non-Qualified Investment Accounts

Whether you’re self-employed or your employer’s retirement plan simply doesn’t measure up, there are other options to consider as you plan to save for retirement. There are individual retirement accounts, or IRAs, including traditional IRAs and Roth IRAs. There are also non-qualified investment accounts to consider.

IRAs and Roth IRAs

IRA stands for an individual retirement account. IRAs allow you to grow your retirement funds on a tax-deferred basis or through tax-free growth. Depending on your income and your tax filing status, contributions to a Traditional IRA may be fully or partially deductible from your income. Withdrawals from a Traditional IRA prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. 

With a Roth IRA plan, you have the option to pay taxes on the money you contribute to your retirement account up front. Once you reach a certain age (59 ½, to be exact) and have had the account open for at least five years, withdrawals from your Roth IRA will then be tax-free. It is important to know that you cannot contribute to a Roth IRA if you make over a certain amount of money each year. Withdrawal of earnings in your Roth IRA prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. 

Non-Qualified Investment Accounts

Non-qualified investment accounts are not eligible for tax benefits like deductions, exemptions, and credits that are meant to reduce taxable income. However, with a non-qualified investment account, you can invest as much or as little as you want in any given year as well as withdraw your savings at any time. The money you invest is money you’ve already received through income and paid income tax on. The only tax you pay when you withdraw your money from a non-qualified investment account is on realized gains such as interest or appreciation.

Questions to Ask Our Retirement Planners in Des Moines

Professional guidance is incredibly beneficial no matter where you’re at in life, whether you’ve been planning for retirement or are just getting started. However, your financial advisor needs your help just as much to do their job effectively and advise on how you can pursue your goals. Be sure to ask your financial advisor these questions so that together, you can create a plan that best serves your needs.

How much money do I need to retire?

This is a big question, and our financial advisors help folks answer it for their particular situation every day. The amount of money needed to retire varies for everyone depending on their retirement goals, spending habits, and dreams. At Compass Financial, we don’t believe in a one-size-fits all approach to retirement planning. Instead, we take the time to listen to your unique situation so that together we can create a plan tailored specifically to you.

When you meet with one of our retirement advisors in Des Moines, we will ask you questions to learn about your retirement goals and help you determine what your goal dollar amount will be. This will include questions like “When do you want to retire?”, “What do you want to do with your retirement years?” and “What’s your current income that it takes to live on?”

What is your investment and retirement planning philosophy?

Our financial advisors take different approaches depending on your goals. Ultimately, we strive to create a safe environment in which our advisors and clients can feel comfortable and thrive. We fully understand that discussing your money can be intimidating, and we often run into people who fear they have too little or are too late to be creating a plan.

When you choose Compass Financial, our retirement advisors near you will deliver quality and consistency to help you achieve your goals. Our philosophy is something we’ve worked hard to create, and we believe it’s an outstanding reason for ours and our clients’ success.

What’s the best retirement plan for me?

Each individual’s recommended retirement plan varies depending on your goals and your current financial situation. We take into account whether you already have a 401K started or an IRA, and will recommend how to move forward. We may suggest additional opportunities based on your risk tolerance and risk capacity and depending on how aggressive we need to be to reach your retirement goals.

These questions will help you prepare to meet with your retirement planner in Des Moines. Before scheduling a meeting, be sure to check out our independent and comprehensive hourly planning option.

Find a Retirement Planner Near You at Compass Financial Services in Des Moines

Compass Financial retirement planners in Des Moines have helped many Iowans, young and old, find the path to the retirement they’ve always dreamt of. We are dedicated to getting to know you, understanding your unique life goals, and creating a safe place to explore how to get there.

Visit us today to learn more about our retirement planning services near you. If you’re ready to meet our skilled team of Des Moines retirement advisors, reach out to us for a free, no-strings-attached consultation.