Retirement Accounts Are A Must These Days!

If you are new to the work force, you will find that there are lots of demands made on the amount that you earn. First of all there are the tax deductions, and the pension funds to pay into, and there may be a health and dentals package too. You may have car payments that come out of your account automatically, and perhaps rent or a mortgage payment. All of this takes quite a lot away from what started off as a good salary. But we're not finished yet! What about your future? Have you set up any retirement accounts ready for your retirement? No, I'm not joking, I only wish I was. If you can start making even a small contribution every month to an individual retirement account (IRA), it will stand you in good stead once your retirement happens.

I know that when you are young, and have just got your first full time job, you feel like spending your hard earned money. You may find that even without thinking about an individual retirement account your funds do not quite cover your expense each month. It will be difficult, but you really do need to think about your retirement, more so now than ever. Social security payments will not cover very much when you retire. They may not even cover accommodation, never mind if you need the services of a nursing home. It's really hard when reality hits that you cannot afford to enjoy your retirement. After all, you've worked hard for years, you deserve to be able to enjoy your retirement.



So, what is the answer to the lack of funds for retirement? It is unfortunately, to start making payments into an individual retirement account fund as early in life as possible, no matter how difficult that is. What kind of fund? Well, the individual retirement accounts with payments made through your employment generally with pre-tax dollars works well. This way you gain the benefit of paying less tax when you make the contributions. It does mean, though, that your retirement income will be taxed, but usually this will be at a lower tax rate since you will probably not have as much income in retirement.

There is an ira called the Roth IRA which works the same way as the more traditional iras, but you pay the tax up front on your contributions. Although it may mean you pay a lot more tax while you are employed, it does mean that your retirement income is not taxed, which is rather nice. It means all the money in your account is yours, less the management fees if there are any. It is something that you may want to consider.

Once you have set up your account your funds are invested in stocks, bonds or mutual funds, usually a diverse selection to reduce the amount of risk involved. However, it is possible to invest in real estate as long as it is indirectly. You have to find a custodian who knows all the rules and regulations about dealing with real estate in iras, and you must not own any of the property in your ira yourself.

It may be something worth considering since real estate generally appreciates considerably over time, and time is something that most individual retirement accounts have. But first, talk to a professional advisor to find out about all the pros and cons, and this applies whatever method of investing you are considering.

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