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 collapse 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. Though, never leave free money on the table if your company offers a match. Always contribute up to the maximum that they will match.
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. Though certificates of deposits and money market accounts yield little in the way of returns now, for more on yields, visit https://www.bankrate.com/banking/.
You can also open an Individual Retirement Account (IRA). IRAs are quite popular because the money is not taxed until you withdraw the funds, if at all. You may also deduct your IRA contributions from the taxes you owe, depending on your income. An IRA can be opened at most banks or brokerage institutions. A ROTH IRA is a type of retirement account. With a ROTH, you pay taxes on the money you are investing in your account at the time of the contribution, but when you cash out, no federal taxes are owed, provided the account was open for at least five years. ROTH IRAs can also be opened at financial institutions.
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 Registered Financial Consultant 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.
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. The only bad day to be invested was when you were not.
Please feel free to reach out to me if you are in the Metro Nashville area for more information. Those outside of Tennessee reach out to me anyway or find a qualified fee-only Registered Financial Consultant near you.
