Your Retirement Nest Egg

Exploring Account Options for Asset Growth

Accumulating assets for retirement involves selecting from a range of account types, each offering unique advantages to help you grow your nest egg. The best options for you will depend on your employment status, income, and retirement goals. Among the most popular choices are 401(k) plans, Individual Retirement Accounts (IRAs), and annuities.
A 401(k) plan is one of the most common workplace retirement accounts. Contributions are made with pre-tax income, allowing your investments to grow tax-deferred until you withdraw them in retirement. Your company may also offer Roth 401(k), in which you pay taxes now on your contributions, which can be withdrawn tax-free at retirement.

Many employers offer matching contributions up to a certain percentage of your salary, providing an immediate boost to your savings. However, employer contributions may be subject to vesting requirements, so it’s important to understand your plan’s terms. Withdrawals before age 59½ typically incur income tax and a 10% penalty, with certain exceptions.. Despite some restrictions, maximizing your 401(k) contributions is generally recommended due to the tax benefits and potential employer matches.
For 2025, the 401(k) plan limits are:

For individuals under age 50, $23,500
For individuals over age 50, $31,000 ($23,500 regular deferral plus $7,500 “catch-up contribution”)
For individuals aged 60-63, $34,750 ($23,500 regular deferral plus $11,250 “super catch-up contribution”)

Self-employed individuals with no W-2 employees can establish a “solo 401(k)” plan. With this type of plan, an individual is treated as both an employee and employer.

Under this type of plan, the following contribution limits for 2025 apply:

For individuals under age 50, the maximum combined employee and employer contribution is $70,000
For individuals over 50, the maximum combined employee and employer contribution is $77,500
For individuals aged 60-63, the maximum combined employee and employer contribution is $81,250.

IRA’s

IRAs are another valuable tool for retirement savings, especially for those who are self-employed or do not have access to a workplace plan. You can open an IRA independently through banks, investment firms, or online brokerages, and you have control over your investment choices. The two main types are traditional and Roth IRAs. Traditional IRAs are funded with pre-tax dollars, allowing your contributions to grow tax-deferred, with taxes paid upon withdrawal in retirement. Roth IRAs, on the other hand, are funded with after-tax dollars, so qualified withdrawals in retirement are tax-free. For 2025, the contribution limit is $7,000, or $8,000 if you are age 50 or older.

Early withdrawals from pre-tax IRA before age 59½ generally incur taxes and a 10% penalty with certain exceptions, and traditional IRAs require minimum distributions starting at age 73. Withdrawals from Roth IRA can be made at any time, but the tax implications vary based on age and whether you are withdrawing contributions or earnings. Generally, you can withdraw your contributions tax-free and penalty-free at any time. However, withdrawing earnings before age 59 ½ or before the account is five years old may result in taxes and penalties. There are special rules for contributing to an IRA if you also participate in a plan such as a 401(k).

Annuities

Annuities offer another way to secure retirement income. Purchased from insurance companies, annuities can be funded with a lump sum or a series of payments in exchange for a stream of income that begins immediately or at a future date. Like 401(k)s, annuities provide tax-deferred growth, but withdrawals are generally only penalty-free after age 59½. There are three main types: fixed annuities, which guarantee regular payments; variable annuities, where payments fluctuate based on investment performance; and indexed annuities, which are tied to a market index. Annuities often have surrender periods, which can last several years, during which early withdrawals may incur significant fees. They can also be complex and carry higher costs, so it’s important to review the terms carefully before committing.

Choosing the right mix of retirement accounts is crucial for building a solid financial foundation for your future. Each option offers distinct tax advantages, contribution limits, and withdrawal rules, so consider your individual circumstances and consult with a financial advisor to determine the best strategy for your retirement savings

Learn more about our Financial Experts Liebe Miller and Sam Dodson

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The above material does not constitute accounting, legal, or tax advice. You should consult the appropriate professional to discuss your particular situation.

Signature Financial Advisors , LLC is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Signature Financial Advisors, LLC and its representatives are registered, licensed, or exempted *Registration does not imply a certain level of skill or training*

Building Your Retirement Roadmap

Identifying Sources and Meeting Your Lifestyle Goals

Every effective retirement plan begins with a clear vision of your future, regardless of how murky it may seem. Before we dive into the numbers, we take time to help you imagine your ideal retirement. Do you see yourself traveling the world or enjoying the comforts of home? Are you drawn to a simpler lifestyle? Do you picture indulging in luxury? Consider whether you want to remain in your current home or move closer to family and friends. There are no right or wrong answers. Your retirement vision is personal and may evolve over time. Reflecting on these questions now is essential to understanding the true costs of your preferred retirement lifestyle, the resources you’ll need to achieve your goals before and during retirement, and the strategies necessary to build your nest egg. Building your retirement roadmap, identifying sources, and meeting your lifestyle goals is the formula for success.

Customized Plan

Once we’ve clarified your goals, the next step is to estimate how much income you’ll need. Start by creating a spending plan based on your current expenses, then we will adjust for inflation, tax implications, anticipated lifestyle changes, and the likelihood of increased expenses for leisure and travel. Think about how your spending habits may shift as you approach retirement. While a customized analysis will provide the most accurate estimate, a general rule is to plan on replacing close to 100% of your current annual income in retirement. We, as advisors, will assist you in a customized projection, not just assume you will be spending less at retirement.

Equally important is understanding where your retirement income will come from. Most retirees draw from a combination of sources, including Social Security, which provides a small foundation of guaranteed income based on your work history. Medicare is not considered an income source, but it may help cover some healthcare costs. It is important to include out-of-pocket expenses and supplemental insurance in your spending plan.

Employee retirement savings plans such as 401(k) and 403(b) accounts allow you to save pre-tax dollars for retirement, while defined benefit plans (traditional pensions) pay a set monthly benefit with no inflation. Defined contribution plans like 401(k)s depend on contributions and investment performance. Personal savings—including IRAs, brokerage accounts, and other investments—also play a critical role. Reviewing all your potential income sources will help you determine whether your projected income aligns with your retirement goals. If there’s a gap, you may need to adjust your savings or spending strategy. Significant lifestyle changes may require you to update your estimates. It is essential to regularly review and refine your retirement plan—especially as your retirement date approaches and beyond.

Discover our Experts Liebe Miller and Sam Dodson

Disclosure

Investment Advisory Representative of Signature Financial Advisors.

Signature Financial Advisors is affiliated with Signature FA, LLC, a Registered Investment Advisory firm in the State of Texas.*

Advisory services are only offered to clients or prospective clients where Signature Financial Advisors, LLC and its representatives are registered, licensed or exempted.*

*Registration does not imply a particular level of skill or training.

The above discussion of some possible tax strategies does not constitute tax advice. Signature Financial Advisors does not give tax advice. You are encouraged to consult with your own tax advisor who can assist you with your unique personal situation.

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