Whether retirement is a long way off or just round the corner, it goes without saying that you got to start investing now if you want to have a comfortable retired life without having to worry about finances. With the change in social scenario, with rising cost of living and instability of social security system, saving for retirement need not assure you of the comfort you are dreaming of. You have to invest for your retirement rather than saving for it. Earlier people would save ‘for a rainy day’ which really meant retirement, when regular flow of money would cease, health expenses would grow and you will have lots of time to travel and see the world. But the same reasons do not apply today. Today you have to invest, so that your money can grow to a healthy and substantial amount which you will lay your hands on only after retirement.
Have you ever thought about your own company’s retirement plans and benefits? There were a time people truly believed in what the company promised them as the plans were employee-friendly, motivating and sound. But not after the Enron debacle – which made the entire retirement security concept shake in its roots. If you choose not to invest in your company’s retirement plans, you have plenty of other options to invest in.
Stocks, bonds, mutual funds, certificates of deposit, and money market accounts are some of the popular investment options open in front of you. It is common knowledge that people enjoy the returns of their investments only after they retire. You just have to let your money grow with time and when some amount reach their maturity level, re-invest them so that the money continues to grow, as you are growing in age.
Another good investment option is opening an Individual Retirement Account or IRA, where no amount is taxed until you withdraw it. You also have the option of deducting the IRA contribution amount from the taxes you owe. Almost all banks are open where you could open this IRA account. A comparatively newer type of investment option is the ROTH IRA – another retirement account. Here you pay all federal taxes when you put in your money but no tax when you withdraw money from your ROTH account. Both these types of IRAs can be opened at any financial institution.
One of the other popular retirement accounts is the 401(k). While this account is typically provided by employers, you could also open your own 401(k) account. A financial planner or an accountant should be able to help you to open this account. If you are self-employed the Keogh plan is another type of IRA which is most suited. The Simplified Employee Pension Plans (SEP) is a retirement plan specially meant for self-employed people who run small businesses. One of the sub groups of the Keogh plan, but people find it easier and more convenient to operate than a regular Keogh plan.
Whichever retirement plan you choose from the large variety of options, make sure that you choose one at lest, if you want a safe and secure retired life. It is a wise idea not to depend on company’s retirement plans, social security or even a possible inheritance which may fall through for all you know. Your financial future is in your own able hands, if you start investing while you are young and that is today.
