Armchair Millionaire Community Bulletin: Going it Alone on Retirement
Social Security is a question mark and your employer may not offer a retirement plan. This means you have to go it alone on funding your retirement. It may sound daunting, but with the right tools, a secure retirement will be yours.
New York, NY (PRWEB) February 15, 2005 -- Concerned about Social Security? Not covered by a retirement plan at work? No worries--you can secure your retirement all by yourself.
It's important to first realize that Social Security never was intended to take care of all your retirement funding needs. So regardless of the whether Social Security remains on its present course, or shifts to private accounts, or takes some other form altogether, it still is unlikely to ever provide enough for a fully secure retirement. Consider that the current average Social Security retirement benefit is just $955 per month for individuals and $1,574 for couples. Those amounts are adequate to keep most seniors out of poverty, but certainly are not enough to fund a care-free retirement.
Second, consider that 401(k) plans, while excellent investment vehicles, are also not always the be all to end all when it comes to securing your retirement. Here's some perspective on that issue from members of the Armchair Millionaire community:
"My employer offers a plan that matches nothing and is loaded with fees. In addition to that, most of the funds offered have high fees of their own. Because of this, I max my Roth IRA before I do anything with the 401(k)." --Ryan
"My employer's 401(k) plan is okay , definitely better than nothing. I contribute 7 percent of my pre-tax dollars to it and the employer matches 50 cents on the dollar. This is not my only savings. I realize that with the upcoming changes to Social Security, I will have to save more. Therefore, I have some long-term real estate, as well as a few Roth IRA plans." --Jermaine V.
The good news is that you don't have to have either Social Security or a 401(k) plan to save enough for retirement. My guide shows you how to take the best characteristics of 401(k)s and put them to work for your own personal retirement investments.
The Armchair Millionaire's Guide to Going it Alone on Retirement
Leverage tax-deferral. One of the best things about 401(k) plans is that they allow you to defer your taxes on your contributions and investment earnings until you begin to withdrawal your money during retirement. Fortunately, you can get the same kinds of tax advantages through an Individual Retirement Account (IRA). The traditional IRA allows you to defer taxes on your investment earnings and, depending on your income, may also allow you to deduct your contribution. The Roth IRA allows your investments to grow tax-free--forever.
Dollar cost average. When you participate in a 401(k) plan, your contributions are deposited into your investment account each month. This is dollar-cost averaging--investing a set amount on a regular basis--and is a very effective way to minimize the risks of market volatility and boost your returns over the long run. Happily, it's easy to dollar cost average in your own investment accounts. Simply arrange to have a set amount automatically transferred from your bank account into an investment account each month.
Choose your investments wisely. 401(k) plans tend to offer a limited investment selection to participants--typically a dozen or so mutual funds. When you invest for retirement on your own, you have nearly limitless choices for where to invest, so you actually have an advantage here. But you still have to take a common sense approach: This means being fully diversified (you can't beat index funds for diversification) and choosing an asset allocation appropriate for your age and tolerance for risk.
Reinvest your earnings. 401(k) plans automatically reinvest the interest and dividends you earn on your investments back into your account, and you can do the same thing with your own investment accounts. This is a critical move because over time, the thing that will make up the lion's share of your retirement savings will not be what you've invested, but the returns (and the returns on your returns) on your investments.
The Bottom Line: Social Security is a question mark and your employer may not offer a retirement plan. This means you have to go it alone on funding your retirement. It may sound daunting, but with the right tools, a secure retirement will be yours.
The Armchair Millionaire Weekly Survey: Do you think the real estate bubble is about to burst? Log on to www.armchairmillionaire.com and let us know.
Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.
Contact Information:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com
# # #
Bookmark -
Del.icio.us |
Furl It |
Technorati |
Ask |
MyWeb |
Propeller |
Live Bookmarks |
Newsvine |
TailRank |
Reddit |
Slashdot |
Digg |
Stumbleupon |
Google Bookmarks |
Sphere |
Blink It |
Spurl
|
