Thinking of Your Retirement Funds

If you are someone who thinks way ahead of your time or someone who’s planning to retire early, you may want to consider saving your excess cash as early as possible for your retirement. But with living expenses getting higher, this may be a lot more difficult to do than said.

Usually, we can avail ourselves of retirement plans prepared by your employers or some institutions such as insurance companies or government agencies. But in this dog-eat-dog world, such things are more often than not, unreliable. This is why some people prefer to invest their money rather than just saving it.

Through investing, we can actually increase our savings by reinvesting our returns. Stocks and bonds are some examples of investment and are not reserve for or limited to retirement funds.

There are other options we can choose besides investing in stocks or bonds and these options are more focused on our retirement plans.

The IRA is a very favorable option because they are not taxed before, and only taxed as income upon withdrawal. Also, they are exempted from bankruptcy by most states. An IRA can be opened at most banks and there are different types of IRA currently available. One of them is the Roth IRA, which is different from the typical IRA; in that, contributions are made with assets already tax paid and therefore tax free upon withdrawal.

Another option is the 401(k) plan which works almost the same way as IRA but is offered by the employer. While the Keogh plan is another option that is directed for self employed people.

There are many options that you can choose from, and if you’re confused as to which one is more suitable to your needs, you can always consult with your financial planner first, just as long as you are able to choose as early as you can.