Retirement Investment Ideas

Preparing for retirement is an important task that takes advanced and purposeful planning. Employers who offer robust benefits packages will offer employees access to retirement options, and may even match employee contributions.  If financial planning is not one of your strengths, consult a financial advisor and begin planning early on in your working life.

Your financial advisor can help you take advantage of tax advantages of the available menu of retirement options while minimizing tax penalties.

• Consider employer directed retirement vehicles.  Perhaps one of the most widely known retirement vehicles is the 401k retirement account.  The 401k account allows employees to contribute money to a retirement account which is managed by a plan administrator as directed by the employer.  The internal revenue service sets contribution limits to what an individual can contribute to this type of retirement account.  Some employers match employee contributions on a paycheck by paycheck basis or on an annual basis.  Check with your human resources representative to ensure that you are taking full advantage of all the benefits offered to you.


• Consider a traditional individual retirement account (IRA).  These accounts have to be funded by the individual, and are done so with post tax dollars as compared to the 401k which is funded with pre-tax dollars.  Taxes on earnings are deferred until retirement.  Once retirement age is reached, as funds are withdrawn from the IRA account, they are taxed at the normal income tax rate.  Funds contributed to traditional IRA accounts may be able to be taken as deductions on your annual tax return in the calendar year in which they are made.  Check with your accountant or directly with the IRS to verify the full tax benefits.


• Consider a Roth IRA.  This is an investment vehicle, which is similar to a traditional IRA.  A Roth is also funded with post tax dollars, but money withdrawn at retirement age is not taxed.  As taxes on the earnings are avoided, and not deferred, there is no annual tax deduction for Roth IRA contributions.  Consult an accountant or financial advisor to determine if a Roth IRA is best for your needs.