Armchair Millionaire Community Bulletin: Going it Alone on Retirement
Social Security is a question mark and your employer may not offer a retirement plan. This means you have to go it alone on funding your retirement. It may sound daunting, but with the right tools, a secure retirement will be yours.
New York, NY (PRWEB) February 15, 2005 -- Concerned about Social Security?
Not covered by a retirement plan at work? No worries--you can secure your
retirement all by yourself.
It's important to first realize that Social
Security never was intended to take care of all your retirement funding needs.
So regardless of the whether Social Security remains on its present course, or
shifts to private accounts, or takes some other form altogether, it still is
unlikely to ever provide enough for a fully secure retirement. Consider that the
current average Social Security retirement benefit is just $955 per month for
individuals and $1,574 for couples. Those amounts are adequate to keep most
seniors out of poverty, but certainly are not enough to fund a care-free
retirement.
Second, consider that 401(k) plans, while excellent
investment vehicles, are also not always the be all to end all when it comes to
securing your retirement. Here's some perspective on that issue from members of
the Armchair Millionaire community:
"My employer offers a plan that
matches nothing and is loaded with fees. In addition to that, most of the funds
offered have high fees of their own. Because of this, I max my Roth IRA before I
do anything with the 401(k)." --Ryan
"My employer's 401(k) plan is okay ,
definitely better than nothing. I contribute 7 percent of my pre-tax dollars to
it and the employer matches 50 cents on the dollar. This is not my only savings.
I realize that with the upcoming changes to Social Security, I will have to save
more. Therefore, I have some long-term real estate, as well as a few Roth IRA
plans." --Jermaine V.
The good news is that you don't have to have either
Social Security or a 401(k) plan to save enough for retirement. My guide shows
you how to take the best characteristics of 401(k)s and put them to work for
your own personal retirement investments.
The Armchair Millionaire's
Guide to Going it Alone on Retirement
Leverage tax-deferral. One of the
best things about 401(k) plans is that they allow you to defer your taxes on
your contributions and investment earnings until you begin to withdrawal your
money during retirement. Fortunately, you can get the same kinds of tax
advantages through an Individual Retirement Account (IRA). The traditional IRA
allows you to defer taxes on your investment earnings and, depending on your
income, may also allow you to deduct your contribution. The Roth IRA allows your
investments to grow tax-free--forever.
Dollar cost average. When you
participate in a 401(k) plan, your contributions are deposited into your
investment account each month. This is dollar-cost averaging--investing a set
amount on a regular basis--and is a very effective way to minimize the risks of
market volatility and boost your returns over the long run. Happily, it's easy
to dollar cost average in your own investment accounts. Simply arrange to have a
set amount automatically transferred from your bank account into an investment
account each month.
Choose your investments wisely. 401(k) plans tend to
offer a limited investment selection to participants--typically a dozen or so
mutual funds. When you invest for retirement on your own, you have nearly
limitless choices for where to invest, so you actually have an advantage here.
But you still have to take a common sense approach: This means being fully
diversified (you can't beat index funds for diversification) and choosing an
asset allocation appropriate for your age and tolerance for risk.
Reinvest your earnings. 401(k) plans automatically reinvest the interest
and dividends you earn on your investments back into your account, and you can
do the same thing with your own investment accounts. This is a critical move
because over time, the thing that will make up the lion's share of your
retirement savings will not be what you've invested, but the returns (and the
returns on your returns) on your investments.
The Bottom Line: Social
Security is a question mark and your employer may not offer a retirement plan.
This means you have to go it alone on funding your retirement. It may sound
daunting, but with the right tools, a secure retirement will be
yours.
The Armchair Millionaire Weekly Survey: Do you think the real
estate bubble is about to burst? Log on to www.armchairmillionaire.com and let us know.
Lewis
Schiff founded the Armchair Millionaire Web site in 1997. His first book, The
Armchair Millionaire, was published in 2001. Schiff's newest report, "How to
Know When You Are Rich," is now available at www.armchairmillionaire.com.
Contact
Information:
Lewis Schiff
Armchair Millionaire
877-833-2823
http://www.armchairmillionaire.com
# # #
Source : http://www.prweb.com/releases/2005/2/prweb207845.htm