Retirement Planning: How Credit Unions Can Help

Retirement planning is one of those things that always feels like a problem for future-you. And then one day future-you arrives, and you wish past-you had started sooner. Not trying to be gloomy — just: the earlier the better, and later is still better than never.

The Most Powerful Force in Retirement Savings

It's compound growth over time. A 25-year-old who saves $200/month and earns 7% annually will have about $525,000 by 65. A 35-year-old who saves the same amount, same return, ends up with about $243,000. Same monthly savings, ten years earlier, more than double the result. Time is the variable you can't buy back.

IRAs at Credit Unions — What You Need to Know

Many credit unions offer Individual Retirement Accounts (IRAs) — tax-advantaged savings accounts specifically for retirement. Two main types:

Traditional IRA: You may get a tax deduction on contributions now. Money grows tax-deferred. You pay income tax on withdrawals in retirement. Best if you're in a higher tax bracket now than you expect to be later.

Roth IRA: No tax deduction now. But the money grows tax-free and qualified withdrawals in retirement are completely tax-free — including all the growth. Best if you're in a lower tax bracket now, or if you want flexibility later (Roth accounts have no required minimum distributions).

Credit union IRA accounts — typically share certificates or savings accounts — earn dividends and are NCUA-insured up to $250,000 separately from your other accounts. They're conservative by design, which is appropriate for money you won't touch for decades.

Required Minimum Distributions — The Rule You'll Forget Until You Need It

The IRS doesn't let you keep money in a Traditional IRA forever. Starting at age 73 (for anyone who turned 72 after December 31, 2022), you must withdraw a minimum amount each year — called a Required Minimum Distribution (RMD). The amount is calculated based on your account balance and life expectancy.

Miss an RMD and the penalty is significant — historically 50% of the amount you should have withdrawn, reduced to 25% under recent law. Put a reminder on your calendar for the year you turn 73. Roth IRAs don't have this requirement during your lifetime.

Social Security Timing — The Decision Most People Get Wrong

You can start collecting Social Security as early as 62. But if you do, your monthly benefit is permanently reduced — by as much as 30% compared to waiting until full retirement age (66 or 67, depending on when you were born). Waiting past full retirement age increases your benefit by 8% per year up to age 70.

Simple math: If your full retirement benefit is $2,000/month, claiming at 62 might give you $1,400. Waiting until 70 gives you $2,480. Over a 20-year retirement, that's a difference of roughly $260,000.

There's no universally right answer — it depends on your health, other income, and whether you're married. But most people claim too early without fully thinking it through. Check your projected benefits at ssa.gov (create a free account).

Keep an Emergency Fund in Retirement

Unexpected expenses don't stop when you retire. Maintaining 3–6 months of living expenses in a liquid account — like a credit union savings account — means you never have to liquidate investments at a bad time to cover a car repair or medical bill.

Avoid Retirement Fraud

Retirees are the most targeted group for investment fraud. If someone guarantees returns, pressures you to decide quickly, or asks you to wire money — stop. Verify any investment opportunity at investor.gov (the SEC's tool) before committing a dollar.