Suppose you had a stable job for a while already and you are thinking of how you are going to retire in the future. You had imagined a penthouse by the beach and just taking in the beautiful view of the ocean. You also would want to invest in a nice car to fit your whole family. You thought of a scenario where you spent all your money in the casino. However, your company does not offer the traditional four hundred one thousand retirement plan. Thus, you thought of some alternatives to 401k the four hundred one thousand.
This fact should not necessarily bother you. There are many disadvantages to the common ways of retirement. First, the fees can be expensive. You are investing more money compared to others. While this may give you a stable future, you may also be compromising the present. Do not spend too much on this plan if it could only leave you dragging with all the bills you have to pay now.
Accordingly, it could show instability and will give you tax problems. One thing might lead to another and will only put your current financial situation at risk. With this, it is important to really think things through first to prevent sudden unwanted changes in your expenses. Consider some of these alternatives to help you plan for your future while still being able to survive today.
You could opt for traditional and Roth Individual Retirement Accounts or IRAs. You only pay at least five thousand dollars per year. The former gives you tax benefits to be enjoyed now, which means that your contributions will be deducted from taxes. The latter on the other hand, is not deducted from taxes, but withdrawals made in the future will be free from taxes. There will be requirements needed for eligibility for these accounts, so you must ensure you have these complied first.
Another good substitute is the Simplified Employee Pension Individual Retirement Account or the SEP IRA. This is ideal for those who you doing freelances or who have their own businesses. Similar to the traditional ones, benefits will be enjoyed at present. Any business can avail of this option to also be free of taxes. Even if you are running a shop alone, you can still think of tomorrow.
Variable annuities could also work as another option. This is a contract or agreement between an investor and insurance company. The former will buy an annuity through payments, and the latter will agree to craft periodic payments to the former. They can choose if they want to be paid immediately or some other time. Often times, the date would usually be after retiring. There might still be tax penalties or high fees with this choice, so it is good to clarify these concerns first.
You can also have index funds. These are investment funds founded on index stocks. When you invest here, you become a buyer and stockholder of securities and the investment you make reflects on the performance of such item. In every asset sold, you hold a piece of that instead of just having one main stock.
When you want to stick the original plan, you could always choose to bring this concern to your employer. Ask them why they have not chosen the four hundred one thousand plan and maybe suggest establishing that. It might be worth the concern and your company will then go for it. There is no harm in trying, after all.
All in all, plan for the future. Just because your employer does not offer the common retirement plans does not mean it is already the end for you. When you want something to happen, it is always worth the risk bringing it up in one of your meetings, as long as you do it in a polite manner. You never know, your boss is just waiting for you to say that.