Are you thinking about your retirement? It’s crucial to know how to make it all work. These four common retirement plans make sure you have what it takes to enjoy a comfortable retirement once you’re done with your working years.
401(k)
The 401(k) has long been a staple of many retirement plans. That’s because it has a lot of advantages. As those at SoFi remind their clients, “A 401(k) plan is a type of work retirement plan offered to the employees of a company.” This is a plan that makes it easy for all employees to save money for their retirement. It’s convenient, well known, and lets the employee grow their contributions over the long term.
Traditional IRA
For many people, there’s another option they can use when it comes to retirement. This is one of those types of retirement plans that is available to everyone. Even if you are only employed part-time, you can use this plan to get ready for retirement. Many people like this plan because it offers highly useful tax advantages. There are also lots of varied types of retirement options that you can pick from, making it easy to find the kind of fund that you personally like best. If your employer does not offer a retirement plan, you can choose to set this one up on your own. That gives you the tax benefits you need right now as you are earning the money you’ll use for your retirement in the future.
Roth IRA
The Roth IRA has a lot in common with the standard IRA. Like that type of IRA, you make contributions to the account before you plan to retire. However, this has a different tax structure. When you contribute to a standard IRA, you do so with your dollars right now. These are not taxed. You will pay taxes once you take the funds out. With a Roth IRA, you do not get the tax advantages when you put the funds in the account. At the same time, once you withdraw the funds, you will not pay taxes on them. If you can afford this option, this is the perfect choice.
Solo 401(k)
Many people work for themselves. At the same time, they also want to make sure they are saving for retirement. This is where the use of the solo 401(k) can come in handy. The solo entrepreneur can make it work. It’s very easy to set it up on your own. Follow the basic instructions and make the required contributions. In turn, you can expect to have certain tax benefits that will increase your overall retirement funds. It’s also a deeply flexible method of investing that allows you to direct how you’re saving for retirement.
With the above-mentioned plans, you will be able to ensure that you are prepared for your retirement.