Retirement may be a long way off for you – or it might be right around the corner. No matter how near or far it is, you’ve got to start saving for it now. However, saving for retirement isn’t what it used to be with the increase in the cost of living and the instability of social security. You have to invest for your retirement instead of saving for it!
Let’s start by looking at the retirement plan offered by your company. Once upon a time, these plans were quite sound. However, after the Enron upset and all that followed, people aren’t as secure in their company retirement plans anymore. If you choose not to invest in your company’s retirement plan, you have other options.
First, you can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts. You do not have to state to anybody that the returns on these investments are to be used for retirement. Just let your money grow over time, and when certain investments reach their maturity, reinvest them and continue to let your money grow.
You can also open an Individual Retirement Account (IRA). IRAs are quite popular because the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks. A ROTH IRA is another type of retirement account. With a Roth, you pay taxes on the money you are investing in your account, but no federal taxes are owed when you cash out. Roth IRAs can also be opened at a financial institution. For more information on Roth IRA visit, https://www.investopedia.com/terms/r/rothira.asp.
Another popular type of retirement account is the 401(k). 401(k’s) are typically offered through employers, but you may be able to open a 401(k) on your own. It would help if you spoke with a financial planner or accountant to help you with this. The Keogh plan is another type of IRA suitable for self-employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that people typically find easier to administer than a regular Keogh plan. I use SEP plans for many of the self-employed clients I work with, and for more on then visit, https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep.
Whichever retirement investment you choose, make sure you choose one! Again, do not depend on social security, company retirement plans, or even an inheritance that may or may not come through! Take care of your financial future by investing in it today.
If you require assistance with your retirement planning, don’t hesitate to contact me directly or reach out to another fee-only Registered Financial Consultant today!
