|1.||Know what you're investing for.|
|2.||Make paying yourself a priority.|
|3.||Make tax-smart investments.|
|>||A Little Knowledge Goes a Long Way|
|>||Planning for Retirement|
|>||Affording College Costs|
|>||Maximizing Investment Income|
|4.||Diversify your portfolio.|
How do you envision spending your retirement? Do you
have a dream to travel the world, join a country club, or
enjoy your ocean view from your patio that has kept you
working all these years? Either way, you'll need to plan
ahead to make sure you can fund it. Fortunately, Uncle Sam
recognizes several different retirement options that let your
earnings grow tax-deferred or tax-free. Take advantage of as
many of these as appropriate.
No matter which of the tax-advantaged investments you choose, the key is to start early. Because the sooner you begin investing, the better your chances of reaching the finish line with enough cash to live the retirement you've always dreamed you'd enjoy.
If you have an employer-sponsored plan, use it.Many employers now offer what are called defined contribution plans, such as a 401(k) or 403(b) plan. If your employer offers one of these plans, sign up and contribute as soon as you can. This way, the amount you invest is deducted from your income before taxes and grows tax-deferred until you withdraw it. Many employers also provide a matching program, meaning the employer contributes additional funds toward your account. If your employer matches some or all of your contributions, put in at least the amount your employer will match so you can make the most of this benefit.
Contribute to an IRA.Before contributing beyond your employer's match in a 401(k), you'll want to evaluate the tax benefits of IRAs. They often provide more choice and control over your investments than a defined contribution plan. The following chart outlines the two main IRA options that you may be eligible for.
Things to consider Roth IRA or Traditional IRA?
Do you own a business?If you run your own business, you have several other options for retirement savings. Whether you are self-employed or have employees working for you, there are a number of retirement plans available to you and your company. Learn More.
Next: Affording College Costs