One of the first steps toward a successful and stress-free retirement is to understand your options for saving money (and how to avoid unnecessary tax penalties). Although the Social Security system has helped provide for retired Americans for over 70 years, the system's uncertain future is putting more pressure on younger generations to prepare for retirement independently. In this section we’ll provide sites that give you an outline of your saving options, so you can be confident about choosing a retirement strategy that's right for you.
- This guide, like many of the sites recommended here, includes some terminology that you might not be familiar with; Investopedia, published by Forbes, provides an extensive list of retirement terms that should help you understand retirement lingo (and pick up some retirement tips along the way).
- Many banks provide information about saving for retirement online and offer retirement savings services such as IRAs or other investments. Some you'll be able to sign up for online, whereas others require a bank branch visit to set up. Your own bank might waive fees or provide better rates if you open accounts there, or it might be able to provide you with more information, such as access to a financial advisor, that could help you make a decision about what sort of account to open (and even where to open it).
- To begin your search for retirement plans, try checking your company’s intranet (internal Web site) for information about plans such as a 401(k) that might be available to you. If your company doesn’t have such a Web site, ask someone in your HR department.
- Any type of saving can be considered "retirement planning." Investing in real estate, buying stocks, or contributing to a savings account are all ways of preparing for the future. In this guide we'll focus on tax advantaged plans, such as IRAs and 401(k)s.
- Whether you're a seasoned investor or new to financial planning, you'll benefit by having a glossary of retirement terms handy to refer to when unfamiliar words crop up. The Washington Post has a short glossary with definitions for common retirement terms, such as 401(k), Keogh Plan, and Roth IRA. The Motley Fool's "All About IRAs" section has an IRA glossary with definitions for nearly 20 key IRA terms and concepts. For something slightly more comprehensive, explore TD Ameritrade's "Planning & Retirement" glossary.
- “Tax deferral” means postponing the payment of taxes on an investment until a future date. With a 401(k) a percentage of a worker's wage is added to the plan pretax, and payment of those taxes is deferred until the worker decides to withdraw funds in the future, making the plan tax-deferred. A tax deductible expense, such as the funds added yearly to certain types of IRAs, is subtracted from a worker's gross income, reducing his or her taxable income at the end of the year.
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