YORK, Pa -- Are you prepared for retirement?
If the answer is no, you're not alone.
According to a study by the Center for Retirement Research at Boston College, 52% of people are at risk of being unable to maintain their standard of living when they retire.
So what can you do and is it too late?
Sean Clark, a financial expert at York Independents, says it's never too late but you need to start now.
"If we're going to do a rule of thumb, start with 10%."
You may be familiar with a 401k, which both you and your employer contribute to.
"Many people don't have access to a 401k or any other type of employer sponsored plan," said Clark.
If that's the case and you're a working American, you can look into an individual retirement account known as an IRA or a Roth IRA.
Clark says both IRA plans are tax advantage retirement savings, but they are tax deferred at different times.
"A Roth IRA, you make money, you pay taxes and then you contribute. with a traditional IRA your contributions are pre-taxed."
Then both are flipped when you take money out after the age of 59 and a half.
If you want the most amount of money saved and are OK taking the tax hit later in life, go with an IRA.
If you're currently in your money making years and can afford to be taxed now and don't want to be later, then Roth IRA is the way to go.
It could all depend on what you think future tax rates will be.
Clark says it's also important to note that if you're rolling in the dough now, you might not be able to contribute to a Roth IRA.
"By the time an individual is making $118,000 for the year, they start phasing out you're ability to put into a Roth IRA. Once you've made $133,000 for the year, you can't put into a Roth IRA at all."
There is no income limit with a traditional IRA.
However, there is a limit to how much you can contribute a year for both.
"For a regular working individual, it's going to be 5,500 for this year. if you're over the age of 50 you get a catch up, so it's 6,500 for the year."
Now that you understand the lingo a little better, Clark suggests you meet with a financial advisor to go over your individual portfolio.
He also says most advisors do a free consultation. .