Three retirement options to consider aside from a 401(k) This content is categorized as: Finances About of Americans have access to a 401(k) or a similar employer-sponsored retirement plan. A 401(k) is an effective, convenient way to save for retirement. Money is automatically withheld from your paycheck using pre-tax dollars, and you can contribute up to a set limit each year 鈥� plus an additional 鈥渃atch-up鈥� amount if you鈥檙e age 50 or older. You鈥檒l pay income taxes on contributions and earnings when you withdraw funds. If you access your money before age 59陆 you鈥檒l also pay a tax, and keep in mind, the money in your 401(k) is exposed to market volatility. About of employers with 401(k) plans offer a matching program. A typical employer match is 50 percent of the employee contribution, up to 6 percent of your salary. So if you have a 401(k), your first retirement-saving priority should be to max out your employer match 鈥� it鈥檚 free money! But the 401(k) isn鈥檛 the only game in town. If you want to put aside more than the amount your employer will match, don鈥檛 have access to a 401(k), or want to ensure a guaranteed lifetime income, here are three other retirement savings options to consider: Traditional IRA Since 2019, people have been able to contribute up to each year to an Individual Retirement Account 鈥� $7,000 if you鈥檙e 50 or older. If you don鈥檛 have a 401(k) or similar retirement account at work, you can deduct your full IRA contribution from your taxes. Married couples can each have their own IRA and can each take advantage of the full combined contribution tax-deferred. A traditional IRA may be subject to , depending on when you reach age 70陆. As with a 401(k), you鈥檒l pay taxes on contributions and earnings when you withdraw funds. And if you withdraw funds before age 59陆, you鈥檒l pay an additional 10 percent penalty, also like a 401(k). A traditional IRA is subject to (RMDs) after age 70陆 鈥� for some people. Changes made by the SECURE Act in 2019 allows anyone who turned 70 on July 1, 2019, to delay taking their RMDs until age 72. Roth IRA Roth IRAs have the as traditional IRAs. You can鈥檛 deduct Roth IRA contributions from your current taxes, but you can withdraw both contributions and investment earnings tax-free after age 59陆 if the account is at least five years old. Unlike a traditional IRA or 401(k), there鈥檚 no penalty for withdrawing contributions before 59陆, although there is a 10 percent penalty on early withdrawal of account earnings. With a Roth IRA, you鈥檙e not required to withdraw funds by 70陆 and you can even keep contributing to the account after that age. You can save money in both a traditional IRA and a Roth IRA as long as the total amount you contribute doesn鈥檛 exceed the annual limits set by the IRS. Annuity One key thing 401(k)s and IRAs (excluding annuities) have in common is that when your money is gone, it鈥檚 gone. Annuities, on the other hand, provide insurance against the risk of outliving your money after you retire, and may also provide protection from loss due to market downturns. Life expectancy has been increasing, with the expected to live to about age 82 for men and age 85 for women. And while most of us probably won鈥檛 live to be 100, some men and women can expect to see the century mark. Whether you live to be 80, 90 or even 100 and beyond, it鈥檚 important to consider an annuity that provides a guaranteed lifetime income. Not sure which retirement planning options are right for you? Make an appointment with your financial professional to discuss your options for a retirement income strategy that fits your needs and goals. This information is brought to you by 麻豆传媒 鈥� where unconventional thinking brings innovative annuity solutions to help make your retirement dreams a reality.
