Planning for retirement should start during your working years, as early as possible. Whether you are a contracted employee, a salaried employee, or a business owner, the right retirement plan should be implemented.
Types of Retirement Plans
A well-crafted retirement plan will provide you with significant tax savings. The types of retirement plans vary based on whether you are an employee, an independent contractor, or a business owner. The federal government has put several tax incentives in place to inspire workers to set aside money for retirement. The types of retirement plans include:
- 401(k): These are company-sponsored retirement plans that allow employees to contribute to a retirement plan. The company can match funds. The contributions made to the fund are pre-tax, reducing taxable income, but will be taxed when withdrawn from the fund.
- Roth 401(K): A Roth 401(k) involves contributions made with after-tax income, with the later withdrawals tax-free.
- IRA: A traditional IRA allows you to contribute to a retirement fund pre-tax. You may be in a lower tax bracket after retirement, with savings.
- Roth IRA: These funds involve contributions after tax, with the fund growing over time tax-free, along with tax-free withdrawals when you retire.
- Annuities: Annuities can provide a series of payments that typically start at retirement and continue for the rest of the contract owner’s life. Annuities can provide retirement income for either a fixed period of time or for the rest of an annuitant’s life. Retirement income payments can begin immediately with the purchase of an annuity or be deferred to some time in the future.
- Long-Term Care: Long-Term Care has been defined as “medically necessary assistance, recommended by a physician for the treatment of a chronic illness or debilitating injury on a long-term basis. Recovery is usually not expected. Care is oriented toward helping a person function, not toward a cure.
Contact us for assistance with retirement planning strategies that suit your situation.