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Saving for retirement

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September 24, 2006

Albany - - If you're not saving for retirement now, your job may start doing it for you. President Bush signed new legislation that could affect the money you have when you're retired.

Americans work hard for the money. But with bills and everyday expenses - - not many are putting away dinero for retirement.

"There's a lot of folks out there who are not saving. They're waiting on social security to fund their retirement and I'm not saying social security wont be here at retirement age but we'd all be wise to plan on something else to supplement your income," says Mike Marz,  President and C.E.O. of Sun Trust Bank in Albany.

He says now is the time to start thinking about different options for saving - especially after President Bush's 2006 Pension Protection Act. It encourages companies to automatically enroll employees into 401(k) savings programs, instead of requiring them to "opt in".

"Not all companies provide 401 K's but everybody is eligible for an IRA or a roth and which one they go depends on their individual tax situation."

With an individual retirement account, or I.R.A., the money you contribute to it is tax deductible. With a roth IRA, your earnings are tax free...but there's a limit on how much you contribute to this account each year. Then, there's 401(k).

"Most employers will contribute to that and give the employee and option to match a part of that and the employer is giving you money and you're foolish not to take advantage of it. It's a gift, take it."

If you have no clue where to start, Marz says take advantage of 401(k) first and then look into other options to supplement your retirement income.

"Given the option, you should always do the 401(k) first because the employer is making those contributions into your account on your behalf."

So that the money you work hard for now, will still be around when you no longer have to work.

When putting money into a 401(k), the new law suggests setting the base contribution to no less than 3 % of your salary and then increase that by 1 % each year until it reaches 6 %, but no more than 10 %.

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