With company pensions going the way of the dodo, the future for Social Security and Medicare uncertain, and longevity increasing, it's more important than ever to maximize your options for retirement planning. Fortunately, all the tools you need to secure a prosperous retirement are at your fingertips. The key is knowing how to use them.
If you still have cash to sock away after maxing out your retirement accounts, there are some smart ways to invest in taxable accounts. As you edge closer to retirement, you'll also want to start thinking about ways to guarantee and protect your retirement income. So open up the retirement toolbox and take your pick of these tools to secure your financial future.
A CHOICE OF 401(k)s
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As companies freeze their pension plans, some are beefing up their 401(k)s, adding features such as automatic enrollment and an employer contribution. A growing number of employers are introducing a Roth 401(k), which was made into a permanent option by the Pension Protection Act of 2006.
Retirement Saving Made Easy
Saving for retirement is about to get a whole lot easier. So easy, in fact, that about the only thing you'll have to do is show up for work. Follow these simple steps to amass a fortune without lifting a finger.
Great Target-Retirement Funds
As a one-stop shop, target-retirement funds may be the best idea ever for most 401(k) investors. But they're not all created equal. Columnist Steven Goldberg explains.
The Advantage of the Roth 401(k)
By nearly all measures, a Roth 401(k) beats the regular 401(k) when it comes to accumulated savings, even if your retirement is only a few years away.
When to Say No to a Roth 401(k)
But it doesn't always pay to use a Roth 401(k). Stick with a traditional 401(k) if you know your tax bracket will drop or you plan to donate assets to charity.
SEVERAL TYPES OF IRAs
Like 401(k)s, IRAs generally come in two basic flavors: traditional and Roth. If you're looking to put nontraditional assets into an IRA, you might select a self-directed IRA.
Whether you're just starting a retirement kitty or you have yet to contribute beyond your company plan, here's how to get started -- plus suggestions for where to put your money. To delve deeper into IRAs, check out Everything You Need to Know About IRAs.
Ride a Roth to Riches
You don't need to work hard to make a million bucks. Invest in a Roth IRA, and let the power of tax-sheltered compounded earnings do the work for you.
Earned Income Required for a Roth
Find out if you qualify to open a Roth IRA. For more on Roth IRAs, read Everything You Need to Know About Roth IRAs.
Take Over the Reins of Your IRA
Stocks, bonds and mutual funds have a place in any IRA, but perhaps your retirement plan has room for a racehorse or a restaurant. Many individuals who are not satisfied with returns on conventional investments are plowing some of their IRA money into everything from commercial buildings to community banks.
THE BENEFITS OF HSAs
A New Direction for Retirement Savings
Looking for another way to benefit from tax breaks on saving for retirement? Then take a gander at the new, improved HSA.
In Good Health? Think About an HSA
HSAs can be an option for early retirees, who may need health insurance until Medicare kicks in.
A law recently passed by Congress could make it easier to turn an HSA into a pile of money to pay for medical bills down the road.
FOR THE SELF-EMPLOYED
People who are self-employed don't enjoy the advantages of employer plans. But they do have a couple of good options of their very own. And it's likely they can sock away more money than if they worked for someone else.
Trying to choose between a Simplified Employee Pension (SEP) or a solo 401(k) for your self-employment income? Columnist Kim Lankford offers advice.
A Pension Plan for the Free Agent
If you're self-employed and don't need all your income to live on, you could be a perfect candidate for a defined-benefit plan, which would allow you to shelter far more income than the most generous defined-contribution plan.
FOR EXTRA CASH
Maxed out all your retirement account contributions? Here are some ideas for squirreling away extra cash for retirement. If you're 50 or older, first make sure you are taking advantage of catch-up contributions to your retirement accounts.
Boost Savings With Catch-Up Contributions
Columnist Kim Lankford spells out the limits for contributing to retirement accounts for 2007, for both the younger-than-50 set and the 50-and-older set.
What to Do With Your Nest Egg Overflow
Consider an account with a mutual fund company or discount broker if you've maxed out your retirement-plan contributions.
Sometimes It Pays to Forgo the Tax Shelter
Plenty of professionals face a dilemma: They've maxed out on their 401(k)s and make too much to contribute to a Roth IRA. Is contributing the $5,000 maximum to a nondeductible, traditional IRA the right direction to go?
Plus, see our webcasts:
GET FREE PERSONALIZED ADVICE
If you have a burning personal-finance question -- such as how much should you save for retirement or whether your investments are appropriate for your goals -- you're in luck. On Friday, August 17, and Thursday, August 30, you can get free personalized advice from expert financial planners during Kiplinger's Jump-Start Your Retirement Plan Days. Just call toll-free 888-919-2345 between 9 a.m. and 6 p.m. and pose your question to one of the many financial advisers who have volunteered to provide this free service. Or, you can e-mail your question to jumpstart@kiplinger.com starting August 1 and a NAPFA adviser will respond on one of the Jump-Start Days.
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SIMPLE IRA Contribution Limits for 2026simple IRA For 2026, the SIMPLE IRA contribution limit rises to $17,000, with a $4,000 catch-up for those 50 and over, totaling $21,000.
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457 Contribution Limits for 2024retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
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Roth 401(k) Contribution Limits for 2026retirement plans The Roth 401(k) contribution limit for 2026 has increased, and workers who are 50 and older can save even more.
