401(k) can lower tax bill and boost retirement income

How much money will you need to live comfortably when you retire?

It's not a simple question to answer, because the future is very difficult to predict. No one really knows how long he or she is going to live. It's also difficult to forecast how the market is going to perform from year to year. Even so, there are important factors that a participant can control.

Start Early
First and foremost is the decision to start saving. The longer one waits to get started, the harder it is to catch up. Some experts say that for every five years you delay getting started, you may need to double the amount you save each month to reach the same level of income at retirement.

While it's best to start early, starting later is still better than not starting at all. The Carpenters Individual Account Pension Plan offers a 401(k) savings option. Enrollment is not restricted to an annual election period. Eligible participants can elect to make 401(k) contributions at any time during the calendar year.

Save Systematically
Commitment is another factor that's within a participant's control. The Carpenters 401(k) makes systematic saving easy. Contributions are automatically deducted from wages before income taxes are calculated, which lowers the participant's taxable income. Paying less to Uncle Sam is like giving yourself a raise. You have to pay the income tax sooner or later. However, the rate will depend on your tax bracket at the time you begin withdrawing from the account. For many people, their income tax rate is lower at retirement.

Contributions to your 401(k) can be made in increments of $1 up to a maximum of $8 per hour. Once an election is made, that contribution amount remains in place unless the participant elects to change it. Two changes are allowed per calendar year. If necessary, you can elect to rescind your 401(k) contribution even if you previously made two changes within the same calendar year.

An application must be completed to enroll in the 401(k) plan or change one's hourly contribution amount. Send a copy to Carpenters Trusts and give one to your employer. Contact Retirement Services (800-552-0635) if you have questions or need assistance.