Ready, Set, Retire!

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The best thing a person at certain stages of their lives must invest in preparing for retirement. As you begin to get excited about possibly retiring in the near future, the feelings are not just happy ones, but often times scary ones. So many people have not planned for the day when they no longer work. This is an important stage in life because even though you stop working, you have not stopped living. You must still be able to take care of yourself and your responsibilities. Many recognize they should save more for retirement, but exactly what is the best approach, investment or plan to meet your retirement needs? Learn more about some of the best plans to take advantage and make some concrete decisions about your retirement.

Long standing plans

Beginning with plans that have been around for a while is often a safe step. The 401(k) program offers options like employer matching portions of your contribution. If this service is available at your company it is a positive investment and a great head start on retirement savings. You can have a 401(k) even if you are self-employed.

There are several versions of an IRA you could choose from as well. Some focus on the self-employed while others are available through the company you work for. The Simplified Employee Pension (SEP) includes the self-employed and smaller business owners. Employees give up to 25 percent of their income and are easier to set up than a 401(k). The Simple IRA means employers match or not match the employee’s contribution up to about $12,500. The Roth IRA has no restrictions on when you can withdraw any amount that you actually put into the plan. Typically your income is less than $130,000 if you are single and about $190,000 if married.

Health insurance related plans

HSA (health savings account) allows you to save money tax-free because you can use this plan to draw from to pay medical expenses like co-pays or buy medical needs such as hearing aids and eyeglasses. The money in this account rolls over indefinitely and you can even draw from this account at age 65 penalty free. Withdrawing before age 65 will result in taxes and a penalty, however proof of medical expenses means you can reimburse yourself.ready_set_retire

An insurance product called an annuity lets you invest now and gain a guaranteed income stream when you retire. Monthly, quarterly or annual lump sums are all available options. There are several types of annuities available so make sure you pick the one right for you. The company you invest in is important as is how long (or short) you can invest your monies. Know their track record and investment strategies.

Cash value life insurance plans are becoming more popular than 401ks and IRAs this is a tax free way of saving. You pay for a policy that develops cash value. You can then borrow against it and use it as part of your retirement. As long as you have put money in and built cash you can take money out.
Many plans allow you to withdraw early but often time taxes and other penalties incurred. Seek advice and consult with an experienced financial advisor, accountant or financial planner so you know all the options and entitlements available to you. These professionals also know the latest tax requirements providing you with full disclosure. Remember their services typically do not come without a fee so make sure you know the cost for such ongoing services as well.

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