Saving for Retirement
An easier way to save for retirement
There was a time when retirement was so much easier. It was a generation ago, and the prospect of retiring with a pension or defined benefit plan payment was the norm. It was not uncommon for the average worker to retire after working for the same employer for 30 years, and then look forward to many years of retirement income. The combination of pension benefit payments and social security checks made the post-work stage of life comfortable and reassuring.
That was then, this is now
Saving for retirement is no longer quite as easy and today’s retirement plans do not always require the employer to provide any funding. Retirement savings is, in most cases, the sole responsibility of the employee. And while social security still exists today, its future is not a certainty. The reality for this generation is that people have to get serious about retirement saving or face the consequences.
Tax-favored savings
What group will you be in?
It has been said that there will be two classes of people in retirement; the haves and the have-nots. The haves took retirement and retirement saving seriously and did what they could during their working years to prepare for the road ahead. The have-nots decided to put it off until another day, and when retirement came, they were left with little real purchasing power.
Tax-advantaged saving to the rescue
The good news for those who would prefer to be one of the haves is that the opportunity to save has never been better. The government watched the demise of those old pension plans right along with the rest of us and passed laws to make new savings vehicles available. These new vehicles, such as IRA’s and 401(k)’s, offer a number of advantages that benefit those saving for retirement.
A better alternative
The really good news is that you can have an IRA or 401(k) that you control.
If you work for an employer, you can take advantage of a group 401(k) plan, if one is offered.
This will provide you with a tax-deferred method of saving for retirement. An employer 401(k) will also typically give you control over investment choices, although the selection is limited.
What do you do if you work for yourself? You can still have the advantages of an employer 401(k) plan, but packaged as an individual 401(k) that you control.
This type of 401(k) plan is called a solo 401(k) or self-directed 401(k). It offers all of the advantages of tax-deferred growth, but in a self-contained package. The really exciting plan for a self-employed person is the solo Roth 401(k).
Nothing on this web site is meant to replace the sound tax, investment or legal advice found by consulting with a professional. We recommend that you confer with a financial planner, CPA or lawyer to understand the risks involved in investing and any tax consequences involved with starting a retirement savings plan.
The information on this web site is general in nature and is not meant to provide specific legal, accounting or financial advice.
If legal advice or other professional assistance is required, the services of a competent professional should be sought. The authors and owners of content on this web site disclaim any injury sought by those treating this information as guidance for their particular situation. Your situation may be unique and requires individual attention.
