Explore Your Many Retirement Options

Looking at all of your retirement options might seem like a daunting task. There are definitely a lot of different types of accounts for you to consider. Here are a few of the options that you have in front of you when it comes to choosing a retirement account.

IRA

One of the most popular types of retirement accounts is the IRA. The individual retirement account is offered by many different financial brokerages across the country. With the individual retirement account, you will be able to contribute tax-deferred money to your retirement savings. You can contribute as much as $5000 per year to your IRA. If you are over the age of 50, you can contribute as much as $6000 per year. You will also be able to invest your money in a variety of different types of investments. For example, you might be able to choose from stocks, bonds, mutual funds and other types of securities. The money that you make from investments is allowed to grow tax-free as well. Then, when you reach the age of 59 1/2, you can start withdrawing the money and paying taxes on it as if it were regular income.

401k

The 401k is another popular type of retirement account. Many people can access this type of account through their employers. This type of account also allows you to contribute pretax dollars to your account. The 401k has a higher limit on annual contributions when compared to an IRA. As of April 2010, you can contribute as much as $16,500 per year or $22,000 per year if you are over 50. In addition to your individual contributions, your employer has the opportunity to provide matching contributions to your account. When they do this, they will receive a tax deduction for each dollar that they contribute. This allows you to put away a large amount of money for retirement. You should have a variety of investment options with this type of account also.

Annuity

The annuity is another option that you have when it comes to planning for retirement. An annuity is a contract offered by an insurance company. There are many different types of annuities, but they all have the same basic idea behind them. You are going to be paying the insurance company a certain amount of money over time. Once you reach retirement age, the insurance company is going to send you a regular monthly check. Some annuities take care of all of the individual investment decisions for you, and you simply have to worry about making your payments. Other annuities allow you to take control over your investments.

Roth IRA

The Roth IRA is another popular type of retirement account. This type of account is very similar to the IRA except in the way that the taxes are handled. With a Roth IRA, you are going to be funding the account with after-tax money. At that point, the money is allowed to grow in the account tax-free, and you will never have to pay taxes on the money when you withdraw it.

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