Savings are an integral part of retirement planning; you can’t secure your future without making enough savings before retirement. But at the retirement level, putting aside a certain amount of money every month isn’t enough for post-retirement saving; at this level, saving involves putting money into the market to grow it as well. This is why most retirement plans include investment accounts to help you reach your savings goal.
One crucial reason why William Schantz recommends people to get involved with investment accounts for retirement savings is to take advantage of compounding. Compounding allows you to grow your gains, which means when you invest a certain amount in an account, you can gain a larger amount on it after a few years – because the compound rate is applied on an annual basis. In contrast, when you save a certain amount of money in an ordinary account, your amount stays stagnant and gives no gains. Hence, it is best to find the right investment account that fits your needs and requirements.
If you are in search – here are 3 investment accounts you can benefit from.
Investment Accounts for Retirement Savings by Schantz
1. Traditional Investment Retirement Account (Traditional IRA)
IRA is an investment tool that is tax-advantaged for individuals so they can allocate their retirement savings. There are various types of IRA, each with a different tax liability – you can get one depending on your employment status. There are many benefits of the IRA, but according to William Schantz, one that stands out is that your investment is tax-deductible.
This means that if you contribute a certain amount, your taxable income will decrease by that particular amount. Moreover, the money inside your account also grows on a tax-deferred basis – which means you are not liable to pay any taxes until you withdraw.
2. Roth Investment Retirement Account (Roth IRA)
Roth IRA is another investment account that you can make use of. It is quite different from a traditional IRA based on two factors. The first is that your investment is made with after-tax dollars – this means you don’t get a tax deduction at the time of investment. However, the good thing is that you won’t owe the IRA a single cent when it comes to withdrawing. Hence, your investment will grow tax-free over the years.
3. Traditional 401(k) Plans
401(k) are retirement accounts that companies offer their employees. These accounts allow pre-tax contribution, which means, just like in a traditional IRA, you have the opportunity to grow on a tax-deferred basis. You only have to pay tax when you are withdrawing your funds. According to Schantz, there are many benefits of investing in traditional 401 (k) plans, such as the contribution limit for this account is much higher than an IRA. Younger employees can contribute $20,500 – the maximum amount, which is again much more than what IRA permits.
Schantz: Investment is the Best Saving Plan
There are many options for investment and savings if you really plan ahead. Retirement s no easy game if you go into the last quarter of your life empty-handed – to make sure you have a comfortable future and life after retirement, you need to start working for it from today. William Schantz recommends the best way to secure your future is to save using investment accounts!