Moynihan Lyons PC

Single Women often Need to Play Catchup in Retirement

 
Retirement can be a challenging time for unmarried women.

The retirement savings for single women can be lower than married, or even widowed, women. That should be taken into consideration, when planning retirement, according to Barron’s in “The Single Woman’s Guide to Retirement Planning.” Married women may face a steep decline in income when their spouses dies. However, their single peers don’t have the opportunity to inherit a partner’s assets and spousal benefits from Social Security.  

Most retirement advice is geared toward couples. There needs to be a different plan for singles, because no one is going to save with them. They need to save and plan more.

Retirement security for Gen Xers was the topic of a study from the Employee Benefit Research Institute. This is the generation that was born between 1961-1981. The study found that only in one group of Gen Xers — single women — were 50% at risk of not having enough money to cover retirement basics. The average expected shortfall was as high as $73,000. That’s twice the estimated average shortfall for single men and more than triple that of widows. The gap continues into the highest income levels.

Americans are staying single longer and marriage rates are declining. Those trends, and the relatively new phenomenon of “gray divorce,” points to more women facing this scenario in the near and distant future. A little more than half of millennials, have never been married. When today’s older retirees were the age of today’s millennials, they were mostly married — only 17% were single.

Because the risk of running out of funds is higher for women, some advisors favor a more conservative approach, with lower expected returns on an investment portfolio. Add to that, the fact that women provide much of the caregiving to others and afterwards end up having to look after themselves. Perhaps that’s why so many occupants of nursing homes are women.

Advisors to women also recommend that they purchase insurance to help with the cost of long-term care. The first phase tends to come from family members. However, if you don’t have children or family living nearby, you have to be more careful about planning for long-term care costs.

About two thirds of people living alone at home over age 85 are women, according to a 2017 study from the Society of Actuaries. Living at home brings its own challenges and costs. Advisors tell single women that they should consider continuing-care retirement housing earlier than married couples.

Estate planning is especially important for single women. It’s crucial to be sure that documents, including a will, possibly a revocable trust, powers of attorney for both finance and health, and a HIPAA waiver, are in place, while they are well. For those who have trouble naming a proxy (substitute decision-maker)  due to a lack of family, an estate planning attorney can help to identify a private professional fiduciary or financial institution that can serve as a proxy and act as a co-trustee.

Finally, single women need to check on the beneficiary designations on their accounts. Some pensions do not allow for non-spousal beneficiaries, so it might be better to roll the pension into an IRA.

Reference: Barron’s (March 4, 2019) “The Single Woman’s Guide to Retirement Planning”

It May Be Late but It’s Not Too Late to Plan Retirement

If expenses for the kids have been reduced, you have a chance to make your financial situation stronger.

Is your 401(k) going to see you through retirement? Good question but if the answer is no, it is not too late to take a fresh look at your finances and plan for your retirement, according to Bloomberg in “Bigger 401(k) Contributions Are Easier for Empty Nesters.”

We all wish we had taken the advice printed in the 401(k) materials we got at work long ago: be disciplined about savings, put away 10% of your income and maybe 20%, if you can manage it. Every time you get a raise, increase your savings. The longer you wait to save, the more likely you’ll be among the millions of Americans struggling to maintain their lifestyle in retirement. You’ve heard all this. It was great advice. However, those recommended percentages are difficult to do.

It is little wonder then that the average combined 401(k) IRA account balance for American working households in 2016 is about $135,000, according to the U.S. Federal Reserve. That would equate to a household income of $600 monthly in retirement. It is not quite enough to maintain your lifestyle, is it?

Before throwing your hands up in the air, consider that you are far from doomed. Instead, take the opportunity to build your household finances, by continuing to work. This is especially true, if you are an empty nester. The number one solution to a successful retirement is working longer. Even a few years can have a large impact.

Empty nesters who are still working are in the best position of all. The cost of raising children is expensive. Well-off married couples with a child born in 2015 can expect that child to cost about $372,210 from birth to age 17 (that’s in 2017 dollars), according to the U.S. Department of Agriculture. When the children are out of the house, cash flow changes.

If you can keep working, and if the children can become financially independent, your retirement saving should be able to shift into higher gear. The most important thing for empty nesters is not to get comfortable with the new cash flow, when the kids move out. Instead, put away more.

Working longer has now become increasingly common. The civilian labor force participation rate of Americans ages 60-64 increased to 57% in 2018, from 44% in 1987, according to a report from the Brookings Institution.

Knowing that there’s time to save for retirement later in your career is liberating and not as difficult as saving while the children are still with you. There is time to restore your finances, if you take the right steps when the time is right.

Reference: Bloomberg (April 8, 2019) “Bigger 401(k) Contributions Are Easier for Empty Nesters”

Add Fourth Leg to Chair and Strengthen Retirement

Social Security, private saving and pensions…plus one more leg to stabilize the chair.

It may be the time for some to scrap the three-legged retirement tool and go with four legs, in order to be protected from the financial situations that can develop, according to News Max in “New ‘4-Legged Stool’ Can Mend Broken Retirements.”

The questions about the future of Social Security, the end of pensions at most companies and retirement savings hurt by past market crashes, have all combined to take a toll and the answer may be to strengthen the chair to four legs.

Here’s how to build a four-legged chair for retirement:

Income. This is the smallest leg on the chair, and in this case, is not income from your retirement accounts. It’s not pension income either. In this case, the income is a small stream of income during retirement. Maybe you’re a greeter at a store, or a part-time consultant to people you worked with throughout your career. Perhaps you do what a lot of retirees do: start a business, selling on eBay or Esty. Whatever it is, a job that brings in a few thousand dollars a year can make a difference in your retirement stability.

Social Security. Social Security may not be going away completely, but it is possible that the amount of benefits will be reduced. The trust fund will be exhausted in 2034, there are some big demographic shifts now underway with more millennials in the workplace than boomers and depending on your point of view, the changes to Social Security may be big, little, or none at all. Expect something to change. That’s why the small part time job that brings in a little bit of income could be a retirement-saver.

Non-Tax Advantaged Accounts. Retirees need liquidity in retirement. If you have lots of money in your IRA, 401(k), or SEP accounts, that’s great. However, that money may not be immediately available and there are tax consequences to selling those assets that can do damage, if you withdraw too much in any given year.

It is better instead to have a mixture of demand and investment accounts, including checking accounts, savings accounts, money market, and mutual fund accounts. Checking and saving accounts are the most immediately liquid, while money market and mutual fund accounts are less liquid. They could result in a taxable event, if assets are liquidated. The benefit of having money in a taxable investment account, is that you can take that money out with no limitations. If you are taking money from a 401(k) or an IRA before age 59½, you’ll get hit with taxes and possibly penalties. Yes, you may have to pay capital gains taxes on your earnings, but at least those funds are readily available to you if you need them.

Tax-Advantaged Retirement Accounts. These accounts have become the mainstay of most people’s retirement funds. Investment choices are limited for most people, since they are determined by the company handing the accounts for your employer. However, many plans offer benefits, like matching contributions. This is free money, and it is always recommended to do whatever you can to take advantage of any employer matching plans. It lets you make more gains than you would just from your own savings efforts.

These accounts come with strings. You can’t touch them until you are close to retirement age, but there are benefits. If they’re not performing, you can make changes within the restrictions of the investment company. While it’s not easy to figure out what the market is going to do next, with the help of representatives from the companies running the retirement portfolio, you can make informed decisions.

Reference: News Max (April 11, 2019) “New ‘4-Legged Stool’ Can Mend Broken Retirements”

When Did You Last Review Your Estate Plan?

Estate planning should not be a one-time occurrence. Here’s a handy tip:  Do it.  Review it.

You’ve gathered all the financial information needed and your taxes are filed. What’s next? Since you have the financials gathered it might be the very best time to create an estate plan or, if you already have one, a real good time to review the aging document, according to The Pathway in “Giving your estate plans a check-up.”  

If you are among those Americans who actually has an estate plan in place, consider this: when was the last time you reviewed or updated the plan? A person’s estate plan is a living document that needs attention on a regular basis, once it is done. Life changes, tax laws change and estate plans need to reflect those changes. Here are some key reasons to update your estate plan:

People in your life. The relationships you have with the people named in your will, or in your trusts, or as your trustees, may have changed. There may have been happy changes, like birth and marriage, or sad changes, like divorce and death. You might not be close with your colleagues at work because of a job transfer, or your college friends have moved far away and would not be able to serve as your agents. Life changes, and so does your estate plan.

Assets undergo changes as well. If your estate has changed for better or worse since the last time your estate plan was executed, there may be provisions that no longer make sense. If life has been good to you, you may decide to expand an initial donation to a charity that would welcome your generous gift. If you’ve added life insurance coverage, you may want to change how other assets are distributed.

Locations change. Have you moved? If you have changed your state of residence, you must have your estate plan reviewed with an attorney as quickly as possible. Estate law is governed by each state, and what worked well in New Jersey, may not work in Arizona.

Changes in tax laws. After the latest large federal tax law, estate tax exemptions changed dramatically. Plans that you made prior to the tax change may no longer be necessary or may fail to accomplish your goals. There may be advantages that you are missing.

The passage of time. If it’s been more than three years since you’ve reviewed your estate plan and will, it’s time to do so. Locate your original will, review it with an attorney and see if any changes are needed. In a perfect world, you would do this every year after completing your taxes.

People who reach age 70½ years, are required by law to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, SEPs or other qualified plans. As you review your estate plans and retirement accounts, this is a good time to also review your beneficiary designations.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances or review the old one.

Reference: The Pathway (April 1, 2019) “Giving your estate plans a check-up”

Reducing Your Income Taxes During Retirement

There are other options than the traditional 401(k).

Creating a tax-free income is a good way to prepare for retirement, according to CNBC in “3 tips to help boost your tax-free income in retirement.”

You can start by taking a look at the Roth IRA and the Roth 401(k). Unlike a traditional IRA, with a Roth IRA, you pay taxes when you make your contribution to the account, then the funds then grow tax-free over time and, as long as you meet certain conditions, there are no taxes on withdrawals. With a Roth IRA, there are none of those pesky RMDs (Required Minimum Distributions). However, there are withdrawal distribution requirements for a Roth (401)k.

Most employers offer Roth IRA and Roth 401(k) accounts, so there’s a good chance they are offered by your employer.

Roth IRAs are often offered along with their counterpart, the traditional 401(k). Between the two of them, it’s possible to save as much as $19,000 in 2019. For those workers who are 50 and over, you can add $6,000 as a catch-up contribution.

The power of the Roth 401(k) is the tax-free compounding that takes place over time. Don’t miss out on this, if you want to max out your tax-free savings.

There are two different types of Roth plans: the Roth 401(k) and a Roth IRA. Roth IRA plans have income limits. If your modified AGI (Adjusted Gross Income) is more than $137,000 for a single and $203,000 for a couple filing jointly, you aren’t allowed to make a direct contribution to a Roth IRA. However, there are no income caps for Roth (401)k. You can also save more for retirement in a Roth 401(k), compared to a Roth IRA. Roth IRAs are also subject to annual contribution limits: $6,000 in 2019, plus a $1,000 catch-up contribution, if you are over age 50.

Here are three steps to make your retirement savings more tax free:

Can you do an in-plan conversion? If your employer offers a Roth 401(k), you may be able to convert some of your traditional 401(k) savings to the Roth. This is called an in-plan Roth conversion. Just like a direct contribution to a Roth 401(k), it will be taxable. Therefore, make sure that you run the numbers before moving funds. You’ll be responsible for taxes on pretax principal and earnings. Don’t do it all at once, so that you don’t find yourself moved into a higher tax bracket.

What does your plan allow? If you’ve left your employer and have money in both a traditional 401(k) and a Roth (401)k, you might want to convert those accounts — if your retirement plan allows it.  Remember that you may not write a check from an outside bank account to add after-tax money to a Roth 401(k).

What’s your time-frame? Just as young workers are in the best position to save early and often, they are also in the best position to make the most out of Roth savings accounts of all types. It’s likely that younger workers have not yet reached their full career and earnings stage, so now is the best time to put money into a Roth 401(k). When incomes are higher, so will taxes on Roth retirement account contributions. If you’re close to retirement, there are other timing factors to consider, primarily Medicare. How much you pay for Medicare Part B and D, which covers doctor’s visits and prescription drugs, depends upon your modified gross income from two years ago. Do the conversion to a Roth at age 62, if you intend to file for Medicare at age 65.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and incudes retirement planning.

Reference: CNBC (Feb. 10, 2019) “3 tips to help boost your tax-free income in retirement”

Plan Retirement but You Also Have to Live Now

How much do I need to save and how much can I afford to save?

Saving for retirement can sometimes be overwhelming. This is because while you’re saving for the future, you have to pay the bills in the present, according to the Twin Cities Pioneer Press in “Your Money: Helping you live in the moment and plan for the future.” Can it really be accomplished?

The question is asked frequently by people at all ages and stages of their lives. Here are some tips on how you can use comprehensive financial planning — by looking at a variety of retirement income savings methods and income strategies — to make the most of retirement savings. Some of them may not apply now, but you’ll need to know about them in the future, like Social Security.

Do you have a retirement savings strategy? Not everyone takes advantage of the 401(k)s, 403(b)s and IRAs that are available. Some of these retirement accounts come through an employer, and a traditional IRA can be set up on your own. If you work for a company that offers the option of having a Roth IRA and you’re just starting your career, it could be a great option. You pay taxes on contributions now, when your income may be lower, but when you take distributions, you won’t pay income tax on them. There are no required distributions for a Roth IRA — other retirement accounts require a certain amount of yearly withdrawals. If you are in a high-income tax bracket, the Roth IRA is not for you.

Social Security strategies make a big difference in retirement income. Deciding when to take benefits is complicated. However, it is well worth the effort. It could be a difference of thousands of dollars over time. Realize that the later you start taking benefits, up until your 70^th birthday, the greater the benefits will be. Your Full Retirement Age or FRA is currently age 66 for Americans born between 1943–1954, and a few months older for those born later. You can apply for benefits as early as age 62, but you’ll get a reduced benefit — as much as 25%!

What about a Roth conversion? For some people, enhancing their retirement savings by moving existing savings into accounts that offer better tax advantages, adds up nicely for current and future tax brackets. A Roth conversion is when you pay the tax on all or a portion of a traditional IRA and move it into a Roth IRA, where it continues growing. If you have owned the account for at least five years, you can then take withdrawals out tax free, once you turn 59½. Note that this is a complicated decision that must be made in conjunction with all of your other retirement and investment funds.

Planning for retirement income is just that: planning. The alternative — winging it and hoping for the best — rarely works out. The earlier you begin planning for your retirement, the more likely it is that you’ll enjoy this phase of your life.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, as well as plans for retirement.

Reference: Twin Cities Pioneer Press (Jan. 26, 2019) “Your Money: Helping you live in the moment and plan for the future”

Kids All Grown Up? Time to Think about Savings

If you have an empty nest, it might be a good time to think about your own future.

Bringing up children is expensive, so when they grow up and leave the nest you have a chance to review your savings as well as plans for the future, according to USA Today in “5 ways empty nesters can boost their savings and turbocharge their 401(k)s.”

Here’s a five-step plan for making this happen.

Up the savings side. Once you’re not spending cash on your children for clothes, college funds, cars and car insurance, that cash can move into retirement savings. The maximum for a 401(k) in 2019 is $19,000, and if you are over age 50, you can add $6,000 as a “catch-up” contribution. For annual IRA contributions, the limit is $5,000 with a catch-up of $1,000. Increase your paycheck deductions to the percentage, that will get you to the IRS limits. Put savings first.

If there’s a match, don’t miss it. Lucky enough to work for a company that matches all or part of your retirement savings? Do whatever you can to take full advantage of that free money. The most common company match is 50 cents per dollar on 6% of pay, according to Vanguard Group, which says that 70% of 401(k) plans had this match in place in 2017. Let’s say you earn $75,000 and save 6% of your pay. The company would give you $2,250, which means you’d be boosting your savings to $6,750.

Max out savings. The more money that is saved, the faster the nest egg grows. A married couple that socks away a combined $50,000 in pretax dollars every year in their 401(k)s can find themselves with an additional $250,000 in five years. That’s not counting company matches or any investment growth.

Catch-up as fast as you can. Over 50? The IRS promotes savings by allowing catch-up contributions. An additional $6,000 is allowed in a 401(k). Parents who were paying for summer sleep away camp or riding lessons, can move those dollars into their own retirement accounts.

Control spending. The natural inclination when cash flow loosens up is to spend more. Many people decide to live it up during these years, feeling like they deserve to enjoy themselves after dedicating so many years to their children. There’s a balance that needs to be found between enjoying and over-spending. Most families increase their retirement savings when the children are gone, but not by enough. Ramping up spending, instead of saving, means years of missed opportunities to build your retirement accounts.

The best advice is to take the long view. Savings instead of putting a convertible in the garage or taking lavish vacations, when a more modest approach is equally enjoyable could change the nature of your retirement.

Reference: USA Today (Jan. 14, 2019) “5 ways empty nesters can boost their savings and turbocharge their 401(k)s”

Location Can Make a Big Difference in Retirement

10 states that deserve your consideration, as you look toward your retirement years.

If you are thinking of relocation when planning for retirement, you might give some consideration to the states that are most retirement friendly, especially when it comes to taxes and finances, according to Kiplinger’s Personal Finance in  “10 Most Tax-Friendly States for Retirees, 2018.”

Most of the states listed below exempt at least part of retirement income, like pensions and withdrawals from tax-deferred retirement plans. They also have low property taxes, which matters more now that the Tax Cuts and Jobs Act limits the amount that can be deducted in state and local taxes on federal returns to $10,000 a year.

   10. Georgia. The Peach State’s low tax climate is attracting retirees by the bushel. How’s this sound: Not only is Social Security exempt from state taxes, so is up to $35,000 of most types of retirement income for those age 62-64. For those 65 and older, the exemption is $65,000 per taxpayer, or $130,000 per couple. There’s no state estate tax and no inheritance tax.

   9.  Kentucky. The Bluegrass State’s riding high with an exemption for Social Security taxes, plus up to $31,110 per person for a wide variety of retirement income. There is an additional exclusion for qualified military, civil service and state and local government pensions. Kentucky also has a homestead exemption on the assessed value of a qualifying single-unit property, which is assessed every two years, according to the cost-of-living index.

  8. New Hampshire. The Granite State rocks taxes: there’s no state income tax, no estate or inheritance tax and no taxes on Social Security benefits. There’s also no sales tax. There is a 5% tax on dividend interest, but a $1,200 exemption is available for residents 65 or older.

  7.  Nevada. Hit the tax jackpot in this state. There are no taxes on groceries and the average combined state and local sales tax rate is 8.14%. No state income tax, no estate tax, no inheritance tax. You can cash in your retirement funds—tax free.

  6.  Pennsylvania. The Keystone State exempts most retirement income from state taxes. Social Security benefits, public and private pensions and distributions from 401(k) and IRA plans are tax free. There are often high local income taxes, but they only apply to earned income. However, there is a state inheritance tax, calculated as a percentage of the value of the estate transferred to beneficiaries and there are different rates, depending on the relationship of the heir to the decedent and the decedent’s date of death.

  5.  Florida. The Sunshine State is chock full of retirees who come for the climate and enjoy the state’s tax policies. There are no state income taxes, no estate tax and no inheritance tax. The average combined state and local tax rate is 6.8%.

  4.  Mississippi. The Magnolia state’s tax policies are in full flower, with no state income tax on Social Security benefits, IRA and 401(k) plan withdrawals, income from public and private pensions and other types of qualified retirement income. Starting in 2019, the first $1,000 of taxable income is except from the 3% rate, and by 2022, the first $5,000 will be except.

  3.  South Dakota. No state income tax, no estate tax and no inheritance tax make the Mount Rushmore state a friendly place for retirees. Social Security benefits and other retirement income enjoys a tax-free ride. Sales taxes are low, but most everything is taxed, including groceries, non-prescription drugs and many services. South Dakota started collecting tax from out-of-state retailers late this year.

  2.  Wyoming. Abundant tax revenue from oil and mineral rights makes Wyoming one of the lowest taxed states in the nation. There’s no income tax, sales taxes are low and the median property tax on the median home value of $199,000, is $1,223, the ninth-lowest in the country.

  1.  Alaska. Okay, we know that not many readers are packing up to move to this rugged state. However, if you did, you’d enjoy no state income tax, so everything from Social Security benefits to retirement account withdrawals to investment gains are tax free. There’s no state sales tax, and in Anchorage and Fairbanks, there are no local sales taxes. Once you’ve established residency for at least a year, you get a dividend check from the state’s oil wealth savings accounts.

Reference: Kiplinger’s Personal Finance (Nov. 29, 2018) “10 Most Tax-Friendly States for Retirees, 2018”

Retirement Comes before School Loans

There are options to borrow for college but few, if any, to borrow for retirement.

School loan? Yes! Retirement loans? No! Since that is the way of the world, it is most likely best to focus on saving for retirement and keeping those savings in your retirement account, according to the Star Tribune in “Do your kids a favor: Pick retirement savings over tuition.”

The number of people who are using retirement savings as a backup for paying for education are on the decline. The 2016 edition of that survey is down from 39%. It’s good that more parents are thinking twice about making this financial mistake.

Paying for college expenses from a tax-advantaged employer retirement account, like a 401(k), can become very costly. Here’s why:

• How does a 10% tax penalty on early withdrawals, if you’re under 59½ sound? Not good.
• The money you withdraw is taxed as income.
• You’re losing the tax-free growth of your savings. Remember, these retirement accounts grow tax-free.
• You lose the benefit of compounding, so your growth potential is losing ground.

The “least worst” option, say experts, is to fund a Roth IRA. Unlike qualifying contributions to a 401(k) or traditional IRA, the Roth IRA contributions are not tax-exempt. As a result, there are fewer restrictions on early withdrawals.

However, you’re still losing out in many ways. This includes when you get further along into your retirement years and you don’t have enough money to support yourself. Take a very long-term perspective on what will happen in the future.

Parents must understand that while it’s nice that they want to sacrifice to help their children through college, they may actually be generating far more stress for their children when the kids have to help Mom and Dad during retirement years. That’s likely when their kids are having children of their own, paying a mortgage and saving for their own children’s college expenses.

One last major consideration is: college aid. Your withdrawals from retirement funds will be counted by financial aid offices as ordinary income. If it pushes your total wages up too high, your college-bound student may not qualify for assistance.

Your best bet is to continue to fund retirement accounts because they are not taken into consideration, if your student qualifies for financial aid.

Reference: Star Tribune (Nov. 6, 2018) “Do your kids a favor: Pick retirement savings over tuition”

Social Security Remains Popular through the Decades

Despite popularity, the debate has continued for years and years.

Social Security began decades ago, as a government program to help alleviate extreme poverty in America’s elderly population and the debate for and against has gone on for more than half a century. Despite all of that, it still seems to be popular and beneficial for the wealthy as well as the poor, according to AZ Central in “Social Security: Designed to help poor Americans in old age, it’s a relatively good deal for wealthier ones, too.”

In some ways, it can be said that Social Security has failed to live up to the goal of helping the most downtrodden Americans. The debate over the agency’s progressive features, or lack thereof, has been going on for many years.

Some supporters say Social Security is progressive and achieves its goals. One group is the Investment Company Institute, a mutual-fund trade group that says government paid benefits replace a much higher percentage of working-year earnings for lower-paid Americans. This is especially true when you take into consideration the fact that low earners pay less in Social Security payroll taxes during their working lives.

However, there are some factors that make Social Security less progressive than intended. Many of people die before they claim any benefits. For this reason, many Americans file earlier than they otherwise would, locking in benefits at a low level. Poor people don’t live as long as wealthier people so they tend to claim early and not receive benefits for as many years. Social Security benefits are based on earnings, lower-earning Americans receive lower benefits.

Other factors impact how much money people receive from their Social Security benefits. One progressive feature: there is a cap on monthly benefits. In 2018, it’s nearly $2,800. That means billionaires won’t receive anything more than a retail clerk, which counts one for the progressive side.

On the other hand, what you receive in benefits is partly based on how much you earned and how much you paid in payroll taxes. That tax rate is 6.2%, whether you are a middle manager or a millionaire. Therefore, the income replacement part of Social Security is progressive, but there are tax and other aspects that make the entire picture somewhat murky.

Here are some pointers for making Social Security part of an economically successful retirement:

• Delay claiming benefits if you can past age 62. Benefits increase about 8% each year, up to age 70.
• Work longer, if you can. Even a few more years of working and delaying claiming Social Security, can be a boost to your retirement income.
• Contribute whatever you can to workplace plans. At least contribute enough to make the most of any matching plans from your employer.
• If you don’t have an IRA at work, open one on your own.
• Use the retirement saver’s credit, a federal tax benefit worth up to $2,000 for an individual (and $4,000 for joint filers) to help low-income people afford an IRA or 401(k) plan.
• Be mindful of tax liabilities when you take withdrawals from retirement savings accounts. You should also remember that withdrawals could impact your Social Security benefits and make them partially taxable.

Reference: AZ Central (Sep. 16, 2018) “Social Security: Designed to help poor Americans in old age, it’s a relatively good deal for wealthier ones, too”