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Building Up

You're in the Thick of Things

You’ve made a plan and you’re following through. Now let’s look at what you need to do to stay on track.

person conversing with others about her BOK Financial retirement fund plan.

Building Up

Building up is all about accumulation. These are your highest earning years and you’ll want to take advantage of them. Consider maximizing contributions. Explore insurance strategies. And be sure to adjust your tactics as your circumstances change. For example, you may start a family, switch jobs, or see a change in your finances. Be flexible with your tactics, but always keep your eye on the goals you set and remember, this is your best time to save!

person enjoying their morning because they used a BOK Financial experienced guide to help them plan a path for their future.

Only 53% of U.S. adults have more money in their emergency savings fund than they have in credit card debt. Do you? 1

Did You Know?

On your journey to retirement, you'll likely face many risks that have the potential to throw you off course. Following are five common challenges retirement investors face. Take some time now to review and understand them before your journey takes an unplanned detour.

couple evaluating BOK's advice on the five common challenges retirement investors face.

Did You Know?

Saving money is just the first step toward reaching your retirement goals. The next step: investing that money wisely.

Your savings might be well-served in a diversified mix of investments, and not left as cash — which may not keep up with inflation or grow significantly over time. A diversified investment portfolio of stock and bond investments, and potentially other types of assets, may allow you to generate returns on your savings over time and could help your portfolio weather the market’s ups and downs.

So, how do you develop an investment strategy for your retirement savings?

developing an investment strategy by saving money for your retirement goals.
  • fifteen percent

    Do you have a formal plan? Many financial advisors recommend saving 10-15 percent of your annual income for retirement. 2

  • forty-three percent

    43 percent of workers guess how much they need to retire rather than basing it on current expenses (38 percent) or using a retirement calculator (25 percent). 3

  • eighty-two percent

    82 percent of all workers are leaning on self-funded savings (such as 401(k)s, 403(b)s, and IRAs and other savings and investments) to pay for their retirement. 3

The Basics

There is a lot of good financial information readily available these days. Unfortunately, there is plenty of not-so-good information as well. The key is recognizing the difference, and knowing when you need to go beyond what you can learn through all the books and blogs.

From a retirement standpoint, a financial advisor could be helpful to those who are truly serious about investing in the future — enough to work with an advisor to formulate a plan and begin making contributions. Advisors can also be helpful to those who are already saving for retirement but need guidance in making adjustments to their plan.

There is no magic asset value at which you need an advisor. What does your gut tell you? If you feel like professional guidance would help with your retirement investing, talk to an advisor.

Not all advisors are fee based, and costs can vary from one to another. Be sure you understand how your advisor will be compensated, should you decide to work with them. Common forms of compensation include, but are not limited to, asset-based fees (e.g., you pay 1%-2% per year on your assets under management) and commissions (i.e., you pay a commission when an investment is made).

More than likely, yes you are. The only requirement is that you have taxable compensation (such as income from your job). However, whether your contributions are tax deductible depends on your income and whether you have access to a work-related retirement account. See “What are the limits on IRA deductions” below.

Setting up an IRA is easy. First, decide who you are going to list as your beneficiary. Then, simply select an institution (such as a bank, insurance or investment company), complete some paperwork and make an opening deposit (often as little as $50). The paperwork will require you to select specific investment vehicles to fund your IRA, but your advisor can walk you through those steps.

It depends entirely upon your modified adjusted gross income (MAGI) for the year, your income tax filing status, and whether you earned income during the year (typically, wages or self-employment income).

2023 and 2024 Roth IRA Income Limits

Filing status 2023 Modified AGI 2024 Modified AGI Contribution Limit
Married filing jointly or qualifying widow(er) Less than $218,000 Less than $230,000 For 2023: $6,500 ($7,500 if you're 50 or older).
For 2024: $7,000 ($8,000 if you're 50 or older).
$218,000 to $228,000 $230,000 to $240,000 Reduced
$228,000 or more $240,000 Not eligible
Single, head of household, or married filing separately (and you didn't live with your spouse at any time during the year) Less than $138,000 Less than $146,000 For 2023: $6,500 ($7,500 if you're age 50 or older).
For 2024: $7,000 ($8,000 if you're 50 or older).
$138,000 to $153,000 $146,000 to $161,000 Reduced
$153,000 or more $161,000 or more Not eligible
Married filing separately (and you lived with your spouse at any time during the year) Less than $10,000 Less than $10,000 Reduced
$10,000 or more $10,000 or more Not eligible

It all depends upon your personal goals and circumstances. If you can make deductible contributions and want to lower your taxes while you're still working, a traditional IRA might make sense. Are you looking to preserve assets for your heirs? Minimize taxes during your retirement? If so, a Roth IRA may be a better choice. Here’s why:

Both traditional and Roth IRAs feature tax-deferred growth of earnings. Both allow you to contribute up to $7,000 in 2024 of earned income, plus an additional $1,000 "catch-up" contribution if you qualify. Both allow certain low- and middle-income taxpayers to claim a partial tax credit for amounts contributed. But that’s where the similarities stop.

With a traditional IRA, anyone with earned income can contribute the maximum $7,000 in 2024 (plus catch-up if eligible). Whether you’re allowed to deduct those contributions, however, will depend upon your annual income, your filing status, and whether you or your spouse is covered by an employer-sponsored plan. Any distribution will be subject to income taxes to the extent that the distribution represents earnings and deductible contributions. With a traditional IRA, you must start taking annual distributions at age 73, but if you draw money out before age 59½, you may pay a 10% early withdrawal penalty.

There are no age limitations for contributing to a Roth IRA. You can contribute as long as you have taxable compensation and qualify. Your income and tax filing status will determine your ability and the amount you’re able to contribute.

Roth IRAs are not tax deductible. However, you’re not required to take distributions from a Roth IRA at any age, which gives you more estate planning options. Also, qualified withdrawals aren’t subject to income tax or the early withdrawal penalty if certain conditions are met. Non-qualified withdrawals will be subject to a 10% penalty tax but only on the earnings portion of the withdrawal.

50 percent of people retire before they wanted for reasons including layoffs, caregiving responsibilities, an unexpected change in their financial situation, and health issues. During the Building Up stage, think about planning a cushion for these types of events. 4