Best Retirement Plan in USA?
Thursday, January 14th, 2010 at
8:14 pm
m_s asked:
I am 26 year old female. My company doesn’t provide any retirement plan like 401K or something.
Where else I can plan for my retirement. Since I have time, i can probably go for some safe plan.
Also tell me if by chance I have to take out my money from my retirement plan before my retirement , what happens?
I am 26 year old female. My company doesn’t provide any retirement plan like 401K or something.
Where else I can plan for my retirement. Since I have time, i can probably go for some safe plan.
Also tell me if by chance I have to take out my money from my retirement plan before my retirement , what happens?
Tagged with: 401k • Money • Retirement Plan
Filed under: Retirement
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You can put money into a Roth IRA. You don’t get to deduct the contribution, but when you make your withdrawls they aren’t taxed (a 401-k’s are) and this is a great advantage. I think another good idea is to overfund a dividend paying whole-life insurance policy, from a MUTUAL insurance co. (NOT a stock company- this is critical) This is a very strong plan and since you are young it is cheap. Again, no tax benefit now, but your withdrawls are tax free, as is the growth with no risk. There are far too many options out there to cover them all here, but that’s 2 good ideas.
Withdrawls prior to age 59 & 1/2 are usually subject to a penalty and income tax. Not so with the insurance plan though, you can access the $$ whenever you want. Any good insurance agent would be able to give you the specifics.
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You should definitly open a Roth IRA. It’s the BEST retirement savings vehicle there is, especially if you don’t get a 401k match (and certainly if you don’t even have a 401k).
1. You can put in $4000 in 2007 and $5000 in 2008. Annual limit goes up with inflation after that.
2. You don’t pay income taxes on any gains, interest, or dividends EVER. With a 401k or Traditional IRA, your contributions grow and compound tax free (you dont’ owe taxes each year), but when you take the money out, you pay income taxes then. That means if you have $1,000,000 in a 401k, you can really only take out $700,000 because you’ll owe taxes of $300,000 (30% bracket). With a Roth, the whole million is yours to enjoy
3. Roths are flexible–you can your contributions back out ANY time for ANY reason no matter how old you are. You can’t take out your gains on those contributions until you’re 59.5 though (exceptions include buying a home, paying for education costs, becoming disabled, etc. Then you can take out gains early with no penalty).
I recommend Vanguard for a no-fee IRA. Very low expenses, great reputation, large array of solid funds, etd. Fidelity is a good 2nd choice.