Alternatives to Social Security
All of us want to live our future years in the best possible manner. We look forward to a pleasant life ahead without having to worry about money.
In order to plan your finances for your retirement years you need to consider other investment options rather than relying only on Social Security. With Social Security benefits providing support to an ever-increasing number of retirees and seniors in the US, funds may fall short in the coming years. So, it is time you gave serious thought toward other personal savings plans. Some of the investment alternatives you may consider for your retirement years are 401 or 403 plans, IRAs, annuities, stocks, bonds and mutual funds.
A 401 plan, also known as 401(k) plans, can get you free money from your employer, lower taxable income, savings and earnings without you bothering to make deposits. All this means a steady flow of income even after you retire from your work. 401 plans are from a bunch of retirement plans known as defined contribution plans in the US.
When you participate in a 401(k) plan, you can usually put up to 15 percent of your salary into the account every month. But, the employer has the right to limit that amount. In 2006, the individual total annual contribution, limited by the IRS was $15,000 in the US. The money you contribute comes out of your check before taxes are calculated and this makes the 401(k) one of the best alternatives to Social Security.
A 403 plan, also known as 403(b) plan, is a retirement plan similar to a 401(k) plan. It is offered by non-profit organizations, like universities and charitable organizations while a 401(k) plan is offered by corporations. Your employer can determine the financial institution(s) where you can maintain your 403(b) accounts. You can enjoy reduced taxable income through pre-tax contributions and tax-deferred earnings on plan contributions. You will have pay less tax on assets as the distributions will usually occur during your retirement when you will be in a lower tax bracket.
If you want to learn more about 401(k)/403(b) plans, you may check at “401(k)/403(b)”