Last Updated on May 20, 2021 by MoneyVisual
If you have taken time to read this, you are most definitely in your retirement phase or are making initial plans for an easy-going and wealthy retired life in your near future.
Before you finally call it quits from your job and decide to hit the trail, there are some facts you need to take into account. Some life planning or enjoying escape rooms, clear goals, and regular investment can help you achieve what you want.
According to the reports of the Social security administration, social security accounts for 39% of the income during your retirement, which may not be enough to fulfill your goals. So, you will have to get in on some retirement plans that will cater to your needs and wishes when your regular income has halted.
Nowadays, pensions are also rare as they depend on the employer’s financial strength and how long you have worked for the company, so they are not as reliable as a stable retirement plan.
To know more about the best retirement plans for a happy, resigned life, read on!
1. Individual Retirement Accounts (IRA) – Roth
If you are looking to enjoy tax-free withdrawals, Roth IRA is the right choice. This plan has unlimited investment options, allows self-directed investing, and gives you a tax-free income if you are sixty years old and have had a Roth for a minimum of five years.
This plan’s other main features are an allowance for post-retirement contribution to Roth, no minimum distributions requirements, and tax-deductible donations.
2. Traditional IRA
Regarding annual contribution limits, the only difference between the traditional IRA and Roth IRA is there are no income restrictions; anybody can be a contributor. They are also comparatively better as you can leach the benefits of tax deductions and tax referrals.
This plan is also easy to set-up and is open to everyone with a current steady income. The program also allows users to purchase investments like stocks, bonds, real estate, and CDs.
3. Spousal IRA
If you have a spouse, the most significant benefit of this plan is that it also allows the non-working spouse to benefit. It permits you to take care of your mate’s retirement plan without having them work and earn a steady income. They can stay home and cater to their personal and family’s needs instead. The provisions and limitations of the Spousal IRA are similar to a traditional IRA.
4. SEP IRA
Another variation of the Individual Retirement Accounts, this plan is mainly for small business owners and their employees. All the contributions to a SEP IRA by the employer go to its employees.
Self-employed workers can also take upon this plan, but figuring out the contribution limit is complicated.
The advantages of this plan are higher contribution limits, and contributions are tax-deductible.
5. Rollover IRA
A rollover IRA gives you the capacity to change the type of retirement account you initially choose. For example, a change from traditional IRA to Roth, or vice versa. While doing this, you can still avail the tax benefits from an IRA.
There is no limitation on the money you want to invest. Therefore, you can ‘roll’ this plan can improve your financial situation.
6. Nonqualified Deferred Contribution Plans
The nonqualified Deferred Contribution plans have a similar structure to Roth but have higher contribution limits. If you have a higher income source, and your other retirement plans have reached their peak, NQDC is an option. Although they don’t offer much security, you can save wealth on a tax-deferred basis.
Also, NQDC has a vast field of investment without any income restrictions.
7. Real Estate
If handled properly, real estate can count as a source for substantial income flow. Even if you have mortgage debt, the property income can make up for all the expenses like tax and property maintenance.
You can consult a financial advisor such as a ‘Registered Financial Advisor’ with good experience to learn more about dealing with your real estate efficiently. They can help you out with the investment options while balancing the risk of owning a property.
8. Guaranteed Income Annuities
This annuity provides a guaranteed income flow after you retire. In this plan, you can choose to receive a fixed monthly payment or an annual payment.
Although employers don’t contribute to this plan, individuals can purchase these to make their pensions.
Under this plan, there are two types of options. Single-Premium Immediate Annuity and Deferred Income Annuity, in which the former allows you to invest and withdraw immediate payments, and the latter gives you a flexible cash-refund option.
9. Cash-Value Life Insurance
In this plan alternative, you can invest an amount available for withdrawal with interest in the future. Most of these life insurance options offer two features: Death benefit and cash value.
This loan format is taxable income and can serve as a perfect retirement income and life insurance coverage.
You can do this by making a withdrawal, taking out a loan, surrendering the policy, and using the cash value to help pay premiums.
10. Solo 401(k) Plan
This plan is mostly for the business owners and their spouses. It is best if the business owner is both an employer and employee as elective deferrals of up to $19,500 can be made. They also provide a non-elective contribution of up to 25% of compensation, excluding catch-up contributions.
Although this plan is a little complicated to set-up, it’s best if one does not plan on hiring workers.
Investments are the key to a financially secure life. One undoubtedly toils hard throughout his life to accumulate coins and capital for a safe-sailing in his old age. As long as you have the eligibility to fund multiple retirement plans, the choice is not an issue.
You can plan an investment based on what you want to do after you get retired and work to achieve that stability. Couple that with a good health plan, a sense of purpose, and long-lasting friends, and you are good to go! Adopt one or more of these plans, and you can sail through a smooth and wealthy retired life!