These days, retirement isn’t about setting up a rocking chair on the porch. Today’s retirees are living longer and leading more active lifestyles than ever. And when the latest crop of baby boomers retires, they’ll live even longer. Living longer, of course, means they’ll need more retirement income.
No matter what your age, it’s never too early to start stashing away money towards your retirement. In fact, the earlier you start, the more comfortable your retirement lifestyle will be. Unfortunately, too many Americans are letting near-term expenses and necessities stand in their way.
According to a recent survey by the Consumer Federation of America (CFA), 50% of American households have less than $1,000 in net financial assets. If you think that`s scary, consider these statistics published by the U.S. Senate Subcommittee report on Aging in America:
Among Americans 65 years or older:
- 22% must continue working.
- 36% rely solely on Social Security.
- 45% are dependent on their relatives.
- 4% can meet their own expenses.
- 1% have resources that exceed their living expenses.
The following are some of the more prevalent savings and investment plans specifically designed for accumulating money for retirement.
Defined Benefit Plan
You concentrate on work, and your employer provides for your retirement. Unfortunately, these age-old pension plans are rapidly falling out of favor.
Defined Contribution Plan
Probably the best way to save for retirement, most defined contribution plans feature free money donated by your employer, called â€œmatching.â€
IRAs offer a lot of flexibility; they just don`t allow you to contribute more than $2,000 a year. Even so, with most people it`s not a matter of contributing too much; it`s not contributing enough.
Annuities offer the ultimate in retirement investment flexibility, but they also charge the highest fees of any retirement investment account. Read on to see just what you get for your money.