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June 24th, 2008
Are You Planning Your Retirement?
What’re some of the most important aspects of being able to retire comfortably? Most experts would agree it’s starting early and knowing where to put your money. For many people, it’s difficult to do either of these because they aren’t familiar with all the different terms involved with a retirement savings. There are a dozen ways you can set up your retirement savings, but it’s important to choose the method that best fits your needs. If you’re not sure where to start with your retirement savings, read up about these key terms.
Retirement Savings Terms You Should Know
Mutual Funds
One of the most common forms of investment is mutual funds. They are actually a collection of stocks, bonds, and other securities held by a group of investors who share losses and earnings based off the funds performance.
Annuities
Annuities are great for people on fixed incomes or saving for retirement. An annuity can help provide life-time income as they typically work by an insurance company making periodic payments to the investor for a specified period of time.
Social Security
Social Security refers to the United States’ government’s retirement supplement plan. Much of the payroll taxes from employers and employees go to this program and eventually trickle back to you later in life.
401(k)
You’ve probably at least heard of a 401(k) at some point if you’ve ever had a job and you may contributing to it already. A 401(k) is a retirement program that most employers offer, which you can easily make contributions to by having the money come out of your paychecks. Some employers will even match whatever amount you put into your 401(k).
Roth 401(k)
A Roth 401(k) is very similar to a regular 401(k), except that you have the option of letting your contributions be taxed before going into a retirement fund that remains tax free forever.
Individual Retirement Account (IRA)
An IRA is basically a retirement account, but with some tax advantages. You can make contributions to your account up to your earned income, which remains tax free until you begin making withdrawals.
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