Today, the term “retirement” is outdated. This word applied to a period when the life span was shorter. People, at present, live longer and continue to be productive and creative long after the traditional retirement age. A lot of baby boomers are currently enjoying lives that are physically and intellectually active.
In the beginning part of the 19th century, the military provided pensions. Soon after, companies followed. In 1935, over half of the senior citizens lived in poverty. Hence, the government established Social Security to offer disability and retirement income. In 1965, the Medicare system was instituted to provide health insurance to the disabled and the elderly.
Saving for the retirement years is as important as saving foods for the rainy seasons. Thankfully, there are various options for funding your retirement. Below are some of the choices you can have:
1. Pension
Unfortunately, not many adults have much to say in this aspect. The lucky ones who still have pensions might not like to rely on them too much – a lot of big companies have rescinded on this. If you are among those who still have your pension, consider yourself lucky, but never count on it paying out.
2. 401ks
A 401k is an investment and retirement savings plan sponsored by the employer and subsidized by you with pretax money, usually deducted from your salary. There are no minimums. You make the investment choices from a list provided by the plan, based on what type of risk you are satisfied with and how much time you have. Many employers match some or all of what you put in; if you do not take advantage of that, it is like giving away money.
3. IRAs
An IRA is an individual retirement account that functions the same. How much money you can put in tax-free relies on factors such as age and the type of IRA you choose.
4. Mutual Funds
Whatever the plan, most people invest in mutual funds, instead of bonds or individual stocks. Mutual funds offer you the ability to invest in different companies, with a professional fund administrator, worrying about what to purchase and sell when. You, on the other hand, share the upside potential of the stock market, while being diversified.
5. Annuities
Another way to get a retirement income stream is to purchase an annuity, which is sold by insurance companies. Here is how it functions: Imaging you have $50,000. The insurance company does the math based on mortality and other factors, and says if you give them $50,000 now, they will guarantee you a certain amount of money per month or annum, no matter how long you live. Hence, it is a guaranteed income.
Investing in retirement savings and other investment plans is a wise decision. You just have to broaden your knowledge on this aspect, and you will never go wrong.
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