Core Insights - Contributions to a traditional IRA can lower tax bills and provide retirement savings, while Roth IRA contributions are not tax-deductible [1][3] - Eligibility for tax deductions on traditional IRA contributions depends on income, tax filing status, and access to employer-sponsored retirement plans [4][6] Contribution Limits - In 2025, individuals can contribute up to $7,000 to an IRA, or $8,000 if aged 50 or older; limits will increase to $7,500 and $8,600 respectively in 2026 [5][14] Deduction Rules - Full deductions are available for traditional IRA contributions if individuals do not have access to a workplace retirement plan, regardless of income [7][9] - Income limits apply for those with workplace plans, affecting the deductibility of contributions based on modified adjusted gross income (MAGI) [8][10] Example of Deduction Calculation - A single filer with a MAGI of $85,000 in 2025 would have a partial deduction due to being within the phaseout range, resulting in a deductible amount of $2,800 from a $7,000 contribution [11][12] Filing Process - IRA contributions can be deducted even if the standard deduction is taken, as it is an above-the-line deduction; taxpayers must report this on Schedule 1, Part II of Form 1040 [13] FAQs on IRA Deductions - Taxpayers may fully deduct contributions up to specified limits unless income exceeds certain thresholds, which can limit or eliminate the deduction [14][15]

Core Insights - The article emphasizes the importance of retirement planning and the various options available for individuals to save for retirement, including IRAs, 401(k) plans, and pension plans [1][2][4][5]. Group 1: Retirement Accounts - Individuals without access to a 401(k) or pension should consider investing in an IRA, which offers tax benefits and allows for a maximum contribution of $7,000 per year in 2025 [1]. - Employees can contribute up to $23,500 to their 401(k) plans in 2025, and employer-sponsored plans provide tax advantages and potential matching contributions [2]. - Business owners with no employees can open one-participant 401(k)s, and high-yield savings accounts can also be dedicated to retirement savings [3]. Group 2: Retirement Planning Steps - Retirement planning should begin early, with individuals encouraged to create a vision for their retirement lifestyle and savings plan [4][5]. - Setting retirement goals, including a target retirement age and estimating necessary income, is crucial for effective planning [9]. - The U.S. Department of Labor recommends having 70% to 90% of pre-retirement income to maintain living standards, translating to $42,000 to $54,000 annually for someone earning $60,000 [9]. Group 3: Social Security and Professional Guidance - The average Social Security benefit in 2025 is projected to be about $2,008 per month, which may not cover average living costs [10]. - Individuals can start claiming Social Security benefits at age 62, but delaying can increase monthly payments [11][12]. - Hiring a financial advisor can help individuals develop a tailored investment strategy and retirement plan [15]. Group 4: Financial Management Before Retirement - The last five years before retirement are critical for ensuring a smooth transition, with actions taken during this period having lasting impacts [16]. - Maximizing retirement accounts, managing debt, and establishing an emergency fund are essential steps to prepare for retirement [20].

Core Viewpoint - The termination of Kodak's pension plan will further reduce the number of employers offering pensions, impacting approximately 35,000 participants who relied on it for retirement funding [1] Group 1: Impact on Employees - Employees who are mid-career will face significant savings shortfalls due to the pension termination, while retirees and near-retirees may not feel much immediate effect [2][3] - The accrual of pensions follows a "hockey stick" curve, meaning that if the pension is terminated early, employees miss out on substantial long-term increases in their pension benefits, potentially receiving only 10% to 15% of what they would have accrued [4] Group 2: Strategies for Retirement Planning - To mitigate the impact of pension terminations, retirees and near-retirees should focus on growing their savings at a rate higher than their withdrawals to build a nest egg that can cover inflation and long-term healthcare costs [5] - For those still years away from retirement, it is advisable to enroll in a 401(k) or other retirement plans as soon as possible and to create a retirement plan to determine annual savings and investment strategies [6] Group 3: Importance of Investment Growth - An example illustrates the importance of investment growth: saving $10,000 annually for 30 years in a savings account at 2% interest results in $405,500, while investing in a high-quality portfolio earning 7% yields $944,600 [7]