For many people planning for retirement is a topic not easily understood and therefore placed on the back burner to deal with later. The sad fact is that social security alone is not enough to depend on when one is ready to retire. Fortunately, there are several options available to those wanting to enhance their investments towards their retirement.
Employer Pension Plans
Many employers offer some type of savings Pension Plan for retirement the most common is either a 401(k) or a 403(b) plan. There is a difference between the two depending on the type of business. A for profit company provides the 401 (k) whereas, a non-profit company provides the 403 (b) plan. With both plans, employers invest a set amount usually matching the amount the employee invests for a set amount of time. Both plans are tax-deferred until the funds become available.
Life insurance companies provide contracts to policyholders called deferred annuities. Policyholders purchase deferred annuities that are tax-deferred savings, utilized later in life towards retirement.
Investors purchase Individual Retirement Arrangements (IRAs), which they own. IRAs are simple to purchase and set up with the help from their financial banking institutions, mutual funds, or through a stockbroker firm. Some life insurance companies provide IRAs as well. There are two different IRAs, Roth IRAs and Traditional IRAs, which are accessible once the investor reaches the age of 59 ½ . Each type of IRA has different tax advantages and penalties to taken in consideration before investing.
Investing in the stock market offers a higher risk of loss, but if monitored properly can payoff big towards ones retirement. Stock market investing is a process of purchasing stock options in one or more companies stocks.
Planning early for retirement and taking action allows for financial freedom from financial worries when the time arrives for retirement. We recomend begining your journey by talking with a professional like Robin Weingast, or any other highly experienced planner with years of experience.