7 Steps to Achieving Your Retirement Goals

Here are seven actions to take to maximize your retirement strategy.

Courtesy of: Phil Zaczek

Branch Name: Morgan Stanley Smith Barney 70 W Madison, Chicago, IL 60602

Phone Number: 312-419-3629

Web Address: http://fa.smithbarney.com/philip.zaczek/

1. Contribute to an IRA to Maximize Your Savings

A key way to build your retirement savings is to contribute
to an IRA. The maximum contribution is $5,000—or $6,000 if you’re age 50 or

The advantages of contributing to an IRA include:
Earningswith tax-deferred growth potential

  • Potentially
    tax-deductible contributions (subject to IRS eligibility rules)
  • Access
    to a wide array of investment options

2. Set Up Automatic Contributions for Investing Ease

There’s no chance you’ll forget to make a contribution
when it’s done automatically for you. If your financial institution offers a funds
transfer service, you can set up an automatic IRA contribution schedule through
electronic transfers from your other financial accounts.

If your current financial institution doesn’t offer this service, you might want to investigate one that does.  Typically, you can either set up a one-time
transfer, or establish a recurring schedule to make your IRA contributions over
time. Once you specify the dates and amounts, your funds will transfer as

3. Diversify Your Savings to Better Manage Taxes in

No one knows what the tax future holds. Diversifying your
retirement assets among tax-free, tax-deferred and taxable accounts may help
you reduce your exposure to future tax increases and provide greater
flexibility for managing your income stream in retirement.

If you only have tax-deferred 401(k) or Traditional IRA
assets, you may want to consider making contributions to a Roth IRA, or
converting Traditional IRA or 401(k) assets to Roth IRAs or Roth 401(k)s (if
your plan permits), to create a source of tax-free income in retirement.

If your income is too high to make Roth contributions, you
can still make non-deductible contributions to a Traditional IRA (and, if it
makes sense for you, subsequently convert those amounts into a Roth IRA) while continuing
to build your savings.

4. Invest in a Roth IRA for a Tax-Free Future

If you’re someone who feels strongly that you will remain
in a high tax bracket in retirement and that taxes will inevitably go up,
consider putting more of your savings into a Roth IRA and benefit from tax-free
income in retirement.

Roth IRA assets will one day provide either tax-free
income to you in retirement or a tax-free inheritance for your beneficiaries.1
A Roth IRA also offers additional advantages:

  • Income
    planning flexibility
    a Traditional IRA, at age 70½ you must stop contributing and begin taking
    minimum distributions—even if you’re still earning income. With a Roth,
    however, there is no contribution cutoff, provided income requirements are met, and no rule about when you must begin tapping into the account. Roth assets have the potential to grow as long as you want, allowing you to make—or forgo—withdrawals as needed.

  • Wealth transfer advantages—If the assets in your IRA are not needed to fund your retirement, a Roth IRA can be an effective wealth-planning tool for beneficiaries.  They can enjoy continued asset growth potential and won’t have to pay taxes when they withdraw the assets.

Due to income limitations, not everyone can contribute
to a Roth. However, anyone can convert to a Roth—so if you have savings
in a Traditional IRA or an employer plan, consider converting all or a portion
of those assets.

To help you understand how a Roth conversion will likely
affect your financial scenario, I can provide a customized Roth Conversion
Analysis for you.  This report explores
your specific situation, factoring in such variables as the amount to be
converted, the distribution year, your date of birth and where you are in the
retirement planning cycle.  Based on this
input, the report shows the after-tax future value of an IRA balance, comparing
the outcomes of a Traditional IRA with those of a Roth IRA.  You’ll also be able to see the wealth
planning advantages of “stretching” a Roth IRA. 
As with all tax related issues, you should also discuss your situation
with your tax advisor.

5. Review Your Beneficiaries for Smooth Wealth Transfer

If your life has undergone any changes that could
influence who inherits your retirement savings, now is a good time to conduct a
beneficiary review of all of your accounts to make sure the savings you’re
building now will be transferred according to your wishes.

Remember that beneficiary designations on an IRA or
qualified plan account always supersede what may be in your will; also, if you
converted an account into a Roth IRA, your beneficiary designations may not
have carried over. Check with your financial institutions to make sure your
beneficiary information is correct and current.

6. Rebalance for Asset Allocation Alignment

Your overall investment strategy helps dictate your asset
allocation strategy. Markets change and investments shift in value. To prevent inadvertently taking on more (or less) risk
than you’re prepared to, your retirement savings shouldn’t be weighted too
heavily in any direction. Remain within your risk tolerance by rebalancing your
retirement asset allocation so it’s properly aligned with your investment

7. Consider Consolidating Accounts for Greater Control
Over Investment Direction

If you’re like most people, you have retirement savings
scattered among several different financial institutions and several different
kinds of accounts. That means your retirement money may not be working as
efficiently for you as it could be. This is especially the case if you have
money sitting in former employers’ 401(k) accounts that are experiencing
underwhelming performance or are not aligned with your current retirement

One retirement account with different investment vehicles
working together is much easier to keep track of than several disparate
accounts. Plus, consolidating all of your retirement savings in one place—and
into IRAs that provide a wide variety of investment options—lends you greater
control over how your money is working for your future. It’s especially
important to consider consolidating retirement accounts if you’ve recently
changed jobs or if your employer has merged with another company or gone out of business.

I can review all of your assets with you and help you develop a retirement strategy specific to your needs. That way, your retirement
savings can work in tandem with your retirement strategy

For More Information

If you would like to learn more, please write care of Phil
Zaczek Phil.Zaczek@mssb.com


1 Distributions of earnings are tax-free if made at
least five years after the year of the taxpayer’s first Roth IRA contribution
and after age 59½ or due to death, disability or for a first-time home
purchase. Withdrawals of contributions are not taxed.


you already have a Traditional IRA with pretax dollars (i.e., deductible
contributions, rollovers from qualified plans), you should consult with your
tax advisor about the aggregation rules that will apply if you convert any
Traditional IRA assets to a Roth IRA.


are published for general informational purposes and are not an offer or a
solicitation to sell or buy any securities or commodities.  Any particular investment should be analyzed
based on its terms and risks as they relate to your specific circumstances and


Allocation, diversification and rebalancing do not assure a profit or protect
against loss in declining financial markets. 
There may be a potential tax implication with a rebalancing
strategy.  Please consult your tax
advisor before implementing such a strategy.


Tax laws are
complex and subject to change. Morgan Stanley Smith Barney LLC, its affiliates
and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal
advice. This material was not intended or written to be used for the purpose of
avoiding tax penalties that may be imposed on the taxpayer. Individuals are
urged to consult their personal tax or legal advisors to understand the tax and
related consequences of any actions or investments described herein.


Article by Morgan
Stanley Smith Barney LLC. Courtesy of your Morgan Stanley Smith Barney
Financial Advisor.


© 2012 Morgan Stanley Smith
Barney LLC. Member SIPC.

CRC 487602   04/12

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