Are you reaching that point in your life when you have to plan for your retirement? You must not rely on your social security money alone for covering all the expenses after your retirement. Not having a proper retirement plan will lead to a bad situation after your retirement and that is something that you must avoid. Here are 4 retirement plans that you can consider and choose from.
1. The 401(K) Plan
This is one of the most popular plans that employers use to secure their employee’s retirement. According to this plan, you must match your employer’s contribution to the plan (which oscillates between 1% and 6% of the payment) to take full advantage of the plan. Plan your investment properly so that you can take full advantage of it after retirement. Failing to match your employer’s contribution will make the investment in this retirement plan redundant. There are many other flexible investment plans for helping you with your contribution to the retirement plan. Choose one that you can afford.
2. Savings Incentive Match Plan for Employees (SIMPLE) IRA
Many small time employers secure their employee’s retirement using this plan instead of the 401(K) plan. The only difference between these two plans is the fact that this plan has no maintenance fee as such from the employer’s side and thus is a popular choice with most small time employers. The contribution that the employee is supposed to make to this plan is deducted automatically from the pay check.
3. Traditional IRA (Individual Plan)
It is always advised that you should maintain an individual retirement plan along with the employer’s retirement plan that is already in place. The contribution that you can make to this plan is limitless and depends on your personal financial abilities completely. The contribution eligibility is set at $5,000, plus $1,000 catch up for those over 50 years old, but not per account.
4. Roth IRA (Individual Plan)
This plan is similar to the Traditional IRA plan with the same limit and eligibility criterions. The only difference is the fact that the contributions you will make to this plan is not income tax deductible.
In case you find out that you are ineligible for the IRA individual plans, you can always set up an annuity fund. The tax benefits are lower than the tax benefits one gets with the IRA funds and also the contribution fees are higher than usual. These shouldn’t deter you from having a solid retirement plan in the first place.
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