When it comes to saving for retirement there are almost an endless amount of options that can be used by investors to save money and find financial security they need in their later years, but some of the more popular options beyond such common investments as stocks or 401(k)s usually center around options like IRAs or annuities, as investors use various options to help diversify their retirement portfolio in the hopes of gaining more and giving themselves a safety net if certain costs like those related to health care increase with age. While it needs to be remembered that IRAs and annuities are not the only investment options that a consumer may have, these two categories of retirement savings are usually some that are researched by investors who are exploring benefits of these retirement savings options in the hopes of diversifying their savings plan.
Last year we saw a lot of inquiries into Roth IRAs and converting a traditional IRA to a Roth account simply because a Roth IRA can be more advantageous for some investors. As example, many investors hoped to convert earnings they had in their traditional IRA, which may have been quite sizable, to a Roth IRA, which could limit the amount of funds that some consumers may be able to apply towards this particular investment vehicle, as a Roth IRA does not require minimum distributions at a certain age nor do investors have to pay taxes when they begin to withdraw their earnings. Yet, some consumer stay away from Roth IRAs because they do not offer a tax advantage on contributions, but rather some investors feel that their tax bracket will be low enough when they begin taking withdrawals from this particular retirement option that they are going to save in the long run by being able to write off IRA contributions now and pay some taxes later.
Yet, when it comes to annuities, many investors see this option to be somewhat secure simply because it does offer the opportunity for an investor to take payouts for life. While it will depend on the situation, the type of annuity an investor selects and the amount they invest as to how helpful the payout could be, there are some investors who like the security of having one source that can provide them income for life or offer more short-term investing and earning options.
What investors must remember though is that there are no guarantees when it comes to these retirement accounts as some will offer less risk, while others could offer more reward for a greater risk, but it all depends on what types of investments these retirement accounts are associated with as to whether a particular investor will see positive results in their diversification retirement funds. It’s because of potential volatility that some investors are beginning to explore more diverse retirement options, like IRAs in annuities, but if consumers are unsure about their financial needs later in life or what exactly these specific types of retirement investing options will offer for their personal needs, it may be necessary for these men and women to consult a financial planner.
While there are officials that can help guide consumers through retirement savings and investing, it should also be remembered that traditional options like a 401(k) or opportunities for investing in stocks or bonds, or other opportunities that may arise, might all be helpful and lucrative for certain individuals depending on their age, investment strategies, and their retirement savings goals. Yet, options like IRAs, annuities, or stocks will not always be an investor’s best financial interest, so when it comes to opting into one of these retirement accounts, investors need to have done their research into how it will impact their particular situation so that they can make the best decision for their retirement needs.