Investing for Retirement

By: Brian Mcgregor

Retirement is a fact of life for the majority of people. It may be a long way off for you - or it might be right around the corner. No matter what point you are at in relationship to your retirement date, it is always wise to take steps towards saving for the event. However, saving for retirement may not be as beneficial as it once was. The increase in cost of living and the instability of social security means that merely saving may not be enough - you now have to invest for your retirement.

The first place to start is by taking a look at the retirement plan offered by your company, if any. Once upon a time, these plans were quite sound. However, companies themselves can get into financial difficulty, Enron is a recent example, which results in employees not having the retirement provision they thought was there.

If you elect not to invest in your company's retirement plan, then there are other options.

First, you can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts. You do not have to state to anybody that the returns on these investments are to be used for retirement. You can simply let your money grow overtime, and when certain investments reach their maturity, reinvest them and continue to let your money grow.

You can also open an Individual Retirement Account (IRA). IRA's are quite popular, and the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks. A ROTH IRA is a newer type of retirement account. With a Roth, you pay taxes on the money that you are investing in your account, but when you cash out, no federal taxes are owed. Roth IRA's can also be opened at a financial institution.

Another popular type of retirement account is the 401(k). 401(k's) are typically offered through employers, but you may be able to open a 401(k) on your own. You should speak with a financial planner or accountant to help you with this.

For the self-employed, the Keogh plan may be appropriate. This is another type of IRA, and it is suitable for self employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that some find is easier to administer than a regular Keogh plan.

Whichever retirement investment you choose, the key is to make sure you choose one now! Again, do not solely depend on social security. And also, be wary of totally relying on a company retirement plan that may or may not come through! The best way to take care of your financial future is by investing in it today.

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