Even if retirement is a long way off you have to start saving now. However, saving for retirement is not what it used to be during our parents’ time. The cost of living has gone up and the Social Security is unstable. No longer is saving enough. You have started thinking about investing for retirement!
Before Enron happened, the retirement plans offered by companies were supposed to be sound and solid. However, with what happened to Enron, people no longer have the same faith in the retirement plans offered by their companies. You no longer have to invest in your company’s retirement plans as there are many other options.
You can now invest in stocks, bonds, mutual funds, certificates of deposit, and even the money market. You just have to invest and then sit back and watch your money grow in time. When certain investments reach their maturity, all you have to do is reinvest the money and continue as usual.
You have the option of opening an IRA (Individual Retirement Account), which quite popular as money is not taxed until you withdraw the funds. You can also deduct your IRA contributions from your taxes. You can open an IRA at most banks. Then there is a Roth IRA, which is a new type of retirement savings plan. It started in 1998. All contributions to a Roth IRA are after-tax and your funds can grow tax-free. You can open a Roth IRA at any financial institution.
Most employers offer a 401k retirement savings plan which offers a few investment instruments chosen by the employer. Most employers offer good instruments and many will have good mutual funds that you can invest in. The contribution to a 401k is from your gross income and it is deducted directly from your paycheck so you do not see it. The contributions are tax-deductible and your funds grow tax-deferred. You can also open a 401k on your own. You need to speak to a financial planner or accountant to help you with this.
Then there is Keogh plan, which is another type of IRA. However, this is more suitable for self-employed people. Another option for self-employed small business owners is the Simplified Employee Pension Plan, also known as SEP. Most people find it easier to administer than a Keogh plan.
You can choose any retirement investment plan. The important thing is to choose one and not just depend on Social Security or company retirement plan to provide for you after retirement.
Don’t forget your health when you retire. Invest in a good Medicare Supplemental plan to help with the gaps. Compare plans here http://www.comparemedicaresupplementplans2018.com.