Plan Ahead for Your Retirement
With the threat to future retirees of social security funds being exhausted in 2036, we all need to start preparing now for our retirement ourselves. It is a frightening thought, having to take more money out of our checks every week just so we can save for after we retire. But in reality, we have plenty of options for retirement plans that won’t cut into our paychecks. Retirement planning is easy, it just requires some prior knowledge.
Here are some options for planning your retirement without relying on social security.
1. 401(k) & Pension
A lot of successful companies and some government organizations offer 401(k) plans for employees. Employers generally approach pension and 401(k) plans in three different ways.
One type of pension plan has the employer contribute a certain amount to the plan for you, and you only receive the money in return when you have worked a certain length of time. Another option is for you to contribute entirely to your plan, while the employer looks for the best return rates based on your, and other employees’, contributions. The third option is a match-based program in which the employer matches a certain percentage of what you contribute to your own plan.
Regardless of the type of plan, you should contribute to your 401(k) or pension plan, as that will build up the total in the plan, which will compound over the years.
2. Roth IRA
Having a Roth IRA is an ideal plan to have. The money that goes into it relies entirely on you. The great part about this plan is that the money you contribute to your Roth IRA account is already taxed when you get paid, so when this money is withdrawn and distributed upon retirement, no additional taxes will be tacked on. In addition, the federal government provides insurance on up to $100,000 on Roth IRA accounts.
3. Stock Market
Though more risky than the two previous options, investing in the stock market is a great way to integrate yourself into the economy. Even on a limited budget, anyone can invest in stocks. While they carry a lot of risk, especially in an economy that has not yet fully recovered, they also provide a much faster gain than traditional savings accounts.
4. Your House
Have you ever considered your home to be an investment? Even despite the current housing situation, consistently making mortgage payments on your current home will build up your equity and the value of your house. As you approach retirement and your kids move out of the house, there will be a lot of extra space. There may be some other family out there actively seeking a home with a lot of space. Many people who are getting closer to retirement sell their homes and move into smaller residences, and make a great deal of money off of their home.
Retirement can be a scary thing. But planning accordingly for retirement, and contributing a small amount with each paycheck, will ultimately keep you financially secure during your years of retirement.
