Let's face it.
We all know that there is a slim to none chance that anyone born in the 1980s will receive a social security check for any amount.
That system was built during a time when 10 workers could support 1 retiree, but as most people know the trend has changed to 2.
5 workers supporting each retiree.
With improved health care people are living to a riper age and consequently are pulling more checks from social security.
Now that we have established the basics about social security we need to move on to how one should plan their retirement with the knowledge that they are paying into a system that might very well never return the favor.
401K is where most people will start preparing for retirement.
However, even with a company match, many young employees choose to opt out of investing in their 401K plan.
A company match is a free and immediate 100% return on your investment, who could turn that down.
I suppose the fact that the money can't really be accessed until one is around 62 would have something to do with it.
My current company does not offer any 401K plan to their employees and I am OK with that as there are many other options to choose from.
The IRAs or Individual Retirement Accounts are currently my favorite retirement plan.
They are simple to set up and have some wonderful tax benefits.
There is the $5,000 a year limit one can add to an IRA, but this limit is what makes the tax benefits so lucrative.
Personally I have chosen a ROTH IRA, which means that I invest with after tax dollars now, but when I take out the money it will not be taxed.
This provides security in knowing that the money has already been taxed and can be used tax free in the future.
Where to invest is a growing question with the volatile nature of many industries.
It is agreed that younger generations should invest in higher risk opportunities and as such I have invested my ROTH IRA in a developing nation's fund that invests my funds into companies primarily in Asia and India.
Although this investment is for the long term, it has done very well in its 4 year existence.
We all know that there is a slim to none chance that anyone born in the 1980s will receive a social security check for any amount.
That system was built during a time when 10 workers could support 1 retiree, but as most people know the trend has changed to 2.
5 workers supporting each retiree.
With improved health care people are living to a riper age and consequently are pulling more checks from social security.
Now that we have established the basics about social security we need to move on to how one should plan their retirement with the knowledge that they are paying into a system that might very well never return the favor.
401K is where most people will start preparing for retirement.
However, even with a company match, many young employees choose to opt out of investing in their 401K plan.
A company match is a free and immediate 100% return on your investment, who could turn that down.
I suppose the fact that the money can't really be accessed until one is around 62 would have something to do with it.
My current company does not offer any 401K plan to their employees and I am OK with that as there are many other options to choose from.
The IRAs or Individual Retirement Accounts are currently my favorite retirement plan.
They are simple to set up and have some wonderful tax benefits.
There is the $5,000 a year limit one can add to an IRA, but this limit is what makes the tax benefits so lucrative.
Personally I have chosen a ROTH IRA, which means that I invest with after tax dollars now, but when I take out the money it will not be taxed.
This provides security in knowing that the money has already been taxed and can be used tax free in the future.
Where to invest is a growing question with the volatile nature of many industries.
It is agreed that younger generations should invest in higher risk opportunities and as such I have invested my ROTH IRA in a developing nation's fund that invests my funds into companies primarily in Asia and India.
Although this investment is for the long term, it has done very well in its 4 year existence.
Source...