If you are thinking about saving for retirement, one of the greatest concerns is having enough money to enjoy your golden years. If you are a number of years away from retirement, then you have time to develop a retirement savings strategy.
But if you are nearing retirement, then you will want to think more carefully about where you place your savings and how quickly it will build. Here are three proven techniques for winning the game:
Individual Retirement Accounts
One of the best plans when saving for retirement is an individual retirement account or an IRA. IRAs are easy to set up and give you a tax advantage every year that you contribute to them. You can have an IRA that is set up to invest in a specific kind of investment, such as a property management association, or you can have one that is tied to the stock market.
There are several different types of IRAs, so it is important to understand what you are investing in before you place your money in an IRA.
IRAs can be rolled over from year to year and you can invest in them every year. If you are investing in an IRA as a couple, there are different limitations on how much money you can put in one each year. For example, if you are single, you can invest up to $5,000 each year.
If you are a couple, you can invest up to $10,000. There are also limitations according to age. If you are under 50, your contribution limitations are $5.000 per year, but if you are over age 50, then you can contribute up to $6,000 per year.
However, there is a tax penalty if you withdraw your IRA investment prior to retirement. You will be expected to pay the tax burden for the entire amount you withdraw.
Money Market Accounts
Another method of saving for retirement is to utilize money market accounts. There are literally thousands of different money market accounts in the financial market today. Before investing in one, you should know the basics of how the money market account works and what kind of investment the manager is utilizing for your money.
For example, a high yield money market account will give you a high return on the money you place in the account, but it may also be placed in higher risk financial instruments.
Most money market accounts use managers who invest the money in the stock market or in other financial markets around the world. In times of financial instability, using a money market fund can be a risky investment, but they are also known to have a higher rate of return than a standard savings account.
Bond accounts invest in government bonds. These are considered a very safe investment and should be utilized for those who do not want to risk their investment on money market funds that invest in the stock market. Government bonds do not have as high a rate of return on investment as money market funds, but they are considered safer.
Overall, if you are nearing retirement age and do not want to risk your money in high risk investment tools, then consider saving for retirement in a bond fund and putting money in an IRA. If you are younger and have the time to risk your investment money, then consider utilizing the stock market and money market funds.