Saving for retirement is a key component to creating a sound financial future. Selecting the right retirement account is the first step.
by Sandy Baker | May 9, 2013
Saving for retirement using either employer-sponsored plans or individual retirement accounts is something many people need to do to prepare for retirement. Though Social Security benefits may provide necessary financing for retirement years, it's rarely enough to provide the same or better lifestyle individuals are living during their working years. To take the first step, you may want to consider using tax-advantaged accounts on a regular basis to build value over time.
Employer-sponsored retirement accounts
offer retirement accounts in the form of pensions or 401(k) accounts. These plans allow the employee to deposit money from their pay into a retirement account. Some employers match the contributions the employee makes up to a certain percentage. Before-tax and after-tax investing is possible with this method, depending on what the employer decides to offer. Often beneficial due to employer-made contributions, these accounts are easily manageable.
Individual Retirement Accounts (IRAs)
Local banks, credit unions and financial investment firms offer IRAs, or individual retirement accounts. Most commonly invested with pre-tax funds, these tax-advantaged accounts allow funds to build in the retirement account untaxed for years. The earnings accumulate without taxation.