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Have a 401(k)? Here’s why an IRA may still make sense

June 20, 2016

It is easy to get comfortable and just let your 401(k) contributions deduct from your paycheck as you focus on work and family life. However, having an IRA with a trusted financial institution in addition to your employer-sponsored plan is smart planning and here's why:

1. Extra income

Employer-sponsored plans are great for a steady investment, but what about one-time extra income? Tax refund, work-related reimbursement, cash gifts, rebates? If you do not need the money for monthly expenses, then why not conveniently save it for the future in a separate financial account?

2. Switching employers

If you switch employers, you may not have the same plan options with your new employer. What is the best way to handle the old employer-sponsored investments? Each plan administrator will give you information to benefit his or her own interests. What you need is a trusted financial service for your future, not theirs.

3. Overall financial picture

You need someone who knows your and your family's full financial goals. These do not depend on just your personal employer-sponsored plan, but also your partner's 401(k) and/or IRA plans, your dependents, your health, and your retirement goals.

4. Aging parents

If you are (or expect to be) taking care of your parents, an important part is their financial planning as well. They may have retirement accounts, but will they remain suitable as your parents age? You have your hands full taking care of their health and emotional needs, so their finances often take a backseat. A trusted financial institution can help you with your parents' financial care, now or in the future.

5. After retirement

Once you retire, the financial questions do not end. What do I do now with my retirement plans? How much must I withdraw? Do I have to withdraw? These new questions need sound answers from someone you trust, and who knows your retirement needs, and those of your family. Someone who has been continually at your service and has your best interests at heart.

6. Estate planning

Not pleasant, but a very important task nonetheless. Whether you develop the legal plan on your own or with an attorney, the convenience of having trusted financial customer service at your fingertips is sure to make this task easier. The sooner you plan your estate, the more time you have to take advantage of financial services offered by your trusted institution to secure an overall balanced retirement.