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5 Different Investment Options for Retirement

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Five Different Investment Options for Retirement

Image by Gerd Altmann from Pixabay

Retirement is a phase of life. It will come no matter how strong and agile you feel now. It is only smart to prepare now, especially if you are from regions with high life expectancy. You would want your money to last longer.

If there is a proper retirement plan, it is simply a time of rest. If retirement is not properly planned, it can mark a significant drop in income.

Ironically, not all people are concerned about a proper investment plan for retirement. According to the Employee Benefit Research Institute, only two-thirds of current employees have an accurate knowledge of a retirement plan.

Making plans for your retirement is a big deal. Properly detailing your income while you work and pay taxes is not a small feat. That is why many retirees employ the help of a good company that can help them do the required calculation.

Generally, the most interesting thing about retirement plans is how certain acts are seemingly okay but can incur a degree of loss when observed on second thought. For example, using bank savings account as a retirement plan looks okay. If closely observed, it is counterproductive for a retiree when you consider inflation and bank saving charges.

Why not consider an investment plan where your money grows as you age or an investment plan that can give you exclusive citizenship of a country?

1. Citizenship by Investment

For senior citizens who need a lifetime vacation in one of the nicest countries in the world, then this the best investment option to consider.

The Island of Malta, Cyprus, Grenada, and the dual island-nation of Saint Kitts and Nevis etc. are some of the countries that offer the cheapest citizenship by investment to those contributing individuals. As such, you’ll easily acquire a second passport during your retirement if you choose this path.

Investing and becoming a citizen in one of these countries gives you privileges that non-investing foreigners can’t afford.

For example, you have significant reduction in taxes and other levies, you have freedom of diversifying your business and you can get various benefits provided by the government that are meant for only the citizens of the country.

2. Real Estate

Try real estate if you want to make a consistent and stable income while retired. Do not go for just any form of real estate. Go for the rental version.

Renting out properties with an agreed mode of payment (according to the law of where you are domiciled), be it weekly, monthly, or annually, will guarantee that your retirement age is sorted financially.

Renting out your properties has little to no associated loss, except for unstable tenants and high maintenance costs. Some of the many pluses of real estate investments include:

  • Regular income is guaranteed.
  • Properties may appreciate over time
  • Tax-deductible spending for the property
  • Gives the ability to make bold and audacious investment plans

As a young individual, you can gather all the experience you need in real estate now. You will need it if you want to invest in real estate.

3. Individual Retirement Account Plan

It is a retirement plan made by the United States government and has since been adopted by other nations worldwide. It is one of the most widely accepted means of retirement planning for the aged.

The plan enables you to save up for retirement up to $7,000 annually and gives you privileges not found in a normal savings account. There are six IRA plans, each with unique features and serves distinct customer bases.

  • Roth IRA
  • Spousal IRA
  • Traditional IRA
  • Others include: Rollover IRA, SEP-IRA, SIMPLE IRA

i. Roth IRA

It has several advantages, including exclusion from tax. You are excluded from paying tax on all money you withdraw from your account as long as you are 59 or older. Also, you can pull out your contributions as many times as possible without any penalties. However, there is a limit to how much money you can put into the account, and you will have to decide how you want your money to be invested.

ii. Spousal IRA

This retirement plan allows the spouse of a worker to also contribute to their traditional IRA or Roth IRA. The spouse enjoys every benefit associated with the IRA but must have a taxable income significantly larger than the required contribution.

iii. Traditional IRA

It is arguably the best retirement/investment plan for any retiree. While saving for retirement, you receive significant tax breaks, and all your contributions are exempt from taxes. However, after withdrawing any amount contributed after retirement, the amount becomes taxable. In fact, withdrawing your money before retirement attracts huge penalties.

Another major benefit of the traditional IRA is that you have limitless investment options ranging from bonds to stocks and real estate. At the same time, you are free to choose how to invest your contributions.

4. Solo-K Plan

It is a specific retirement plan for business owners. If you would agree, business owners are both employers and employees. Having a retirement plan for both entities makes business sense.

However, the whole process and paperwork can be so complicated. You may shoot yourself in the foot if you do not have the best understanding before beginning.

There is a $25,000 limit for the plan. If you exceed this limit, you need to provide a report annually to the government.

5. Annuities

This plan is a simple and direct means of retirement planning. All you need to do is that you have to find a good insurance policy that pay a sum of money to the insurance, and they pay back at agreed intervals and dates.

While the money is with the company, it can defer taxes. At the same time, you can decide whether the payment is made to a spouse or you during or after your lifespan.

But, if you intend to withdraw before the agreed dates of disbursement, you may be charged as high as 10% of your savings.

Conclusion

There are a lot of factors that determine a good retirement plan. Therefore, you need the help of a good company to put you through the nitty-gritty of each plan. In searching for a good company to plan your retirement, be careful and do a background check. Many scammers are online, willing to scam people of their money.

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