Retirement Investing With 401(k) And Roth IRA Plans–Individual Benefits And How Diversifying Retirement Savings May Help

Retirement investing has usually been in the form of a 401(k) for many employees, but there are options like Roth IRA investment programs that have been beneficial for certain men and women who are looking to diversify their retirement savings account in the hopes of extending their security during their retirement years. Obviously, some men and women may not have begun saving for retirement or have only been focusing funds on one particular of retirement savings option, which can be problematic for investors who may, essentially, put all their eggs into one basket.

Some investors saw a great deal of loss in their 401(k) during the recession and economic downturn, and this can obviously be incredibly problematic for someone who may have had the entirety of their savings in one particular form of investment. While Roth IRAs and other forms of retirement investment accounts are not guaranteed against loss or trouble, some financial advisors feel that consumers may stand a better chance at finding more security when they diversify their retirement savings, but again, there are those who feel one particular route may be better for an investor than another.

As an example, an article on stated that, when it comes to investing in Roth IRAs, some individuals are not as consistent with these contributions as they are with, again, a 401(k) account, and this could obviously lead to potentially less retirement savings. Yet, the article goes on to say that it can make sense for some investors to divide up contributions between a 401(k) and a Roth IRA, or other retirement investment options, until they have maxed out their contribution limits.

Understandably, many new investors are drawn to Roth IRAs due to the fact that they can have benefits later in life as investors are able to withdraw earnings from this particular retirement plan tax-free, but there is an annual contribution limit to Roth accounts that investors must also factor into their decision as to whether they should diversify or not. While 401(k)s do allow for a higher amount of contribution, they will require that an investor meet certain payments when withdrawing their earnings, which again is contrary to a Roth IRA.

However, certain tax-deferred retirement investment options may be more beneficial for consumers at the present time rather than a Roth IRA which will not allow a consumer to write off contributions they have made, but again, offer the option of withdrawing these funds tax-free. Essentially, consumers who are looking for retirement investing accounts that may be beyond a traditional 401(k), could benefit when they diversify their retirement savings portfolio, however, looking at a consumer’s current tax bracket, projected tax bracket when they begin withdrawing these funds, and any fees or added costs that may be associated with alternative retirement accounts like Roth IRAs or annuities must all factor into an investor’s decision when it comes to either diversifying their retirement plan and what other investment options they should choose.