Why Plan for Retirement?
For some people retirement is only a few years away, and for others retirement is decades away. Regardless of your age and your expected date of retirement, planning ahead will allow you to live the lifestyle you've always imagined. Time is on the side of those who plan ahead for retirement. Alas, some statistics show that only four of every 100 people who reach age 65 are able to enjoy the lifestyle they anticipated. Everyday that you delay means a missed opportunity for your money to grow.
There are no second chances for making sure you having enough retirement income for your needs. The earlier you start saving toward that time, the better off you could be.
What Are My Options?
The amount of money you need for tomorrow is a growing and moving target. Set some objectives, decide on the risk level you are willing to take and set reasonable expectations. You have a better chance of beating inflation and fluctuating market conditions by committing your savings dollars for the long haul. Start today.
Source: American United Life Insurance Company website
For Individuals and Families:
The IRA - Established by the federal government, IRAs or Individual Retirement accounts permit you to save tax free or tax deferred for retirement. There are two main types of IRAs, Roth and Traditional, for individuals:
Take Retirement Saving into Your Own Hands
You have the power to take charge of your financial future by opening and contributing to an individual retirement account (IRA)
Why is personal retirement saving so important? The number of defined benefit plans (traditional pensions) offered by employers has steadily declined to less than half the number offered in 1986.* And if you are counting on Social Security, the numbers just don't add up. Social Security provides the average retiree only 38% of his or her total income. ** Plus, unless changes are made, benefits could be cut by 27% starting in 2042.**
The Benefits of IRAs
IRAs allow you to save money on a tax-deferred basis, which means your money could grow faster than it would in a taxable account earning the same rate of return. With a traditional IRA, you pay taxes at ordinary income tax rates upon withdrawal at retirement.*** Your contribution may be tax deductible, depending on your income and whether or not you participate in an employer-sponsored plan. Income-earners under the age 70 1/2, or their spouses, may contribute to a traditional IRA.
With a Roth IRA, contributions are never tax-deductible. However, withdrawals of earnings may be tax-free if you hold the account for at least five years and until you reach age 59 1/2. Income-earners of any age, or their spouses, may contribute as long as their adjusted gross income is below certain levels.
With either type of IRA, the maximum contribution amount for 2008 is $5,000; for 2007 is $4,000 ($8,000 for an income-earner and non-working spouse) or earned income, whichever is less. Individuals ages 50 and older may contribute as much as $1000 more. Limits are scheduled to increase in future years. Consult your tax advisor for more information about the type of IRA that's best for you.
There's Still Time to Contribute for 2008
The deadline to contribute to an IRA for the 2008 tax year is April 15, 2009. If you are eligible for a deductible traditional IRA contribution, you may save money on your current tax bill. But even if you aren't eligible, or you contribute to a Roth IRA, it makes sense to take advantage of this opportunity to contribute for 2008. It won't come around again!
How can you do this? At Iman Fund Investments we offer you this golden opportunity.
*Source: Employee Benefit Research Institute, www.ebri.org.
**Source: Social Security Administration, www.socialsecurity.gov.
***Source: Withdrawals made prior to age 59 1/2 may be subject to a 10% tax penalty.
Source: DCU Network - Quarterly Financial Publication from Digital Federal Credit Union ( Winter 2004)
ROTH vs. TRADITIONAL
Roth IRA - No matter what your age, as long as you have earned income or are married to someone who does, you're eligible to contribute to a Roth IRA as long as your modified adjusted gross income doesn't exceed certain levels. Capital gains are tax-free. Withdrawals during retirement are generally tax-free although contributions are not tax-deductible. A Roth IRA is particularly attractive if you're an early-career investor or expect your tax rate during retirement to be higher than your tax rate today. There is no mandatory withdrawal age and the funds can be used for first time home purchase.
Traditional IRA - Virtually everyone who is under age 70 1/2 and works or is married to someone who works is eligible to contribute to a traditional IRA. Generally, you can deduct all or part of your contributions - even if you participate in an employer-sponsored plan - as long as your modified adjusted gross income doesn't exceed certain limits. See the Iman Fund IRA Disclosure Booklet for eligibility rules, deductible limits, and distributions. Even if your contribution is not tax-deductible, your contributions and earnings will be growing tax-deferred. Contributions to the Traditional IRA may be tax deductible, and the funds can be used toward first home purchase.
| Year | Normal* | Catchup** |
| 2007 |
$4,000 |
$1,000 |
| 2008 |
$5,000 |
$1,000 |
| 2009+ |
Indexed |
$1,000 |
* Amount you can invest per year in an IRA.
** If over 50 years of age, you can add an additional amount to the IRA.
The Fund does not offer tax advice. Please contact your tax advisor to determine how current tax laws may affect your specific situation.
Employer-sponsored plans
Many employers' retirement benefits include employer contribution to employees' retirement plans. One is encouraged to contribute as much as practical to these employer-sponsored retirement plans. If your employer offers to match contributions, we recommend putting in at least enough to get the entire match. Generally, one may get a tax break on contributions. Many employers, however, do not offer Shariah-compatible mutual funds. You may contact your employer's human resources or benefits department and request that Shariah-compatible mutual funds be added to their retirement offerings.
For Businesses
SIMPLE IRA - It is a traditional IRA set up by a small employer for a firm's employees. For 2007 and 2008, an employee may contribute up to $10,500 for each of those years. The employer sponsoring the SIMPLE will also make a matching contribution based on a percentage of the employee's pay. Deposits and earnings accumulate tax free until withdrawn, and the contributions are immediately vested with employee.
SEP-IRA - Allows business owners and sole proprietors to make tax-deductible contributions for retirement. The plan is easy to establish and maintain and requires no IRS reporting. An employer can contribute up to 25% of an employee's compensation or $45,000 for 2007 and $46,000 for 2008, whichever is less. Taxes are due at the time of withdrawal. Employer contributions are deductible as a business expense, but the employers' contributions are discretionary.
The Fund does not offer tax advice. Please contact your tax advisor to determine how current tax laws may affect your specific situation.
It Pays to Start Early
Power of Compounding
Time is on the side of those who plan ahead. Everyday that you delay means a missed opportunity for your money to grow. Take this hypothetical situation, of twins. Fatima invests at age 25, contributing $3,000 each year for 15 years and then ceases adding money to the account. Mustafa begins investing at age 35, contributing $3,000 each year for 30 years. We assume each earn a hypothetical return of 8% per year after expenses. The return shown is not indicative of any particular investment. The resulting account values in the link below may just astound you. By age 65, Fatima has accumulated $200,000 more than Mustafa, although Mustafa invested three times that of Fatima. It Pays to Start Early.
Please note that this is a hypothetical example. Actual results will vary. Mutual fund investing involves risks; loss of principal is possible.
Click here for a copy of "How To Retire In Style?".
Click here for a copy of "How To Get Started in Investing?".
IMPORTANT IRA DATES - 2009
- January 1, 2009
First Date to contribute money to your Traditional / Roth IRA for 2009! The Maximum annual contribution in 2009 is $5,000.
- April 1, 2009
Last day for 2008 that you may choose to receive your first Required Minimum Distribution. (For Traditional IRA owners who reached age 70 1/2 during 2008.)
- April 15, 2009
Last day to open or contribute money to your Traditional and/or Roth IRA's for 2008.
- September 30, 2009
Last day to designate beneficiaries of an IRA if the owner passed away in 2008. (Beneficiaries can be removed either by valid disclaimer or by receiving a full distribution of their inherited funds cannot be added).
- December 31, 2009
Last day to convert a Traditional IRA to a Roth IRA for 2009. Last day to take money from a Traditional IRA to fund a Roth IRA for 2009. Last day for 2009 to receive a Required Minimum Distribution from your Traditional IRA. (For IRA owners who have reached age 70 1/2 or older.) Last day for 2009 for designated beneficiaries of a deceased owner's IRA to receive a Required Minimum Distribution.
Retirement Resource Sites
Clicking on the links below will take you to a third party site. The Iman Fund is not responsible for the content, nor does it sponsor any information provided on a third party site.
AARP - www.aarp.org
Roth IRA - www.rothira.com
Women's Institute for a Secure Retirement - www.wiser.heinz.org
Setting Priorities for Retirement Years - www.spry.org
Mutual Fund investing involves risk; principal loss is possible. The Fund invests in foreign securities which involve greater volatility and political, economic, and currency risks and differences in accounting methods. It is possible that the Islamic Shari'ah restrictions placed on investments and reflected in the main investment strategies may result in the Fund not performing as well as mutual funds not subject to such restrictions.
