Building a Portfolio for Retirement Essay

In 1998 an additional way for individuals to save for retirement was introduced to the public as a Roth IRA. These Roth IRA’s are a terrific tax break, especially for individuals previously shut out of the deductible IRA game because their incomes were too high. Here’s why. Unlike traditional IRA’s, Roth contributions are nondeductible. But the earnings build up tax-free (SmartMoney, you wanted to know, 2000). Another great point about the Roth IRA is the fact that any withdrawals are free of federal income tax under certain circumstances. To be free from federal tax the Roth IRA must have been open at least five years and your age must be 59 1/2 or older. To be eligible for a Roth IRA you must have an adjusted gross income (AGI) between $95,000 and $110,000 for single filers and between $150,000 and $160,000 for joint filers. Also with the IRA you are not able to contribute more than $2,000 annually per person. With the Roth IRA there are no taxes due if funds are held in the account for at least five years and you are at least age 59 1/2. Original contributions can be withdrawn

Our nation ensures social welfare through Social Security. However, the United States cannot ensure the welfare of its own welfare system. To save Social Security, Americans in general do not favor an increase in the payroll tax, a cut in benefits or an increase in the retirement age. Furthermore, Americans are relying upon Social Security as their sole source of income at increasingly alarming rates. Social Security is intended to supplement retiree income, not account for 100% of it. Through elimination of the potential options, that leaves one necessary action: invest the Social Security trust fund in the stock market.

There are many advantages of 401 (k) plans, both for employees and their employers. One major important benefit is that the employee has control over how much money they contribute to their account. In addition all employer contributions and any growth in the capital grow tax-free until withdrawal. If the company matches contributions, it's like getting extra money on top of your salary. Also, unlike a pension, all the savings can be moved from one company's plan to the next (or to an individual retirement account) if a participant changes jobs (Neiters). Another benefit can be that employees can reduce their taxes because they are reducing their taxable income while they are working and because they will be in a lower tax bracket when they begin making distributions. "The major cause for the huge popularity of

As you may know there are two types of pension plans that are most commonly used: a defined contribution plan and a defined benefit plan. “A defined contribution plan sets forth a certain amount that the employer is to contribute to the plan each period (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011). “A defined benefit plan specifies the amount of pension benefits to be paid out to plan recipients in the future. Companies that use this plan must make sufficient contributions to the funding agency in order to meet benefit requirements

While the physical, emotional and social aspects with aging may be experienced in varying degrees and in a variety of ways, the milestone of retirement is a prospect that is universal in the Western world. In most countries, the idea of retirement is of recent origin, being introduced during the late 19th and early 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Nowadays most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers and/or the state. Today, retirement with a pension is considered a right of the worker in many societies. ("Retirement," 2013, p. 1) Retirement is a milestone which, to most, marks the entrance to “old age”, the point at which an individual is socially recognized for their long years of service and permitted to spend the remainder of their “golden years” enjoying the fruits of their labors. While this perspective is an ideal, retirement carries with it a social status that can be both beneficial, when viewed as a reward, and detrimental, when considered by the retiree to be a sign of being obsolete. Preparing for the changes that come with retirement, and in this day and age the inability to

It is never too early to start planning for the retirement. In today’s economy there are no guarantees that there will be sufficient funds coming from Social Security when an individual reaches the time

There are many different ways to save money and there are different things to save for. A savings plan for an immediate want is apparently different than a savings strategy for retirement. One may choose to select stocks, bonds, or mutual funds for a savings strategy, however, my personal choice is to invest in bonds first, then mutual funds.

Costa, D. L. (1998). The evolution of retirement: Summary of a research project. The American Economic Review, 88(2), 232-236. Retrieved from https://search.proquest.com/docview/233045640?accountid=41759

Social Security, on average, makes up the largest part of older people 's income (Novak, 2012.) With Social Security making up such a vast portion of retirement income, yet only maintaining 62% (Mendel &, Schram, 2012) of a person’s pre-retirement income, individuals should utilize Individual Retirement Accounts, and Defined Contribution plans combined with Social Security to avoid poverty in old age.

Therefore, your dependence on Social Security depends on your gender, ethnicity, and class/labor market status. If you are a women you will be penalized within Social Security for taking periods of time off work to care for children and parents because they do not recognize that as being unable to work (Wellin, Lecture: October 21). This affects many women because they are the majority of caretakers within the family. They are socialized to be caretakers at a young age by family, peers, media, and schools. I believe that Social Security should be amended to incorporate a policy for those who need to take off work to help those family members in need. Did you know that only one-third of working women have access to supplementary income besides Social Security (Wellin, Lecture: October 26)? This is most likely because that they use their savings to help take care of family members and they use that while they aren’t receiving any income. Also, women are less likely than men to receive income from private pensions; this pattern also was found in blacks and Hispanics (Quadagno: 356). Even those that received private pensions that were not white men received less benefits than those who were white men (Quadagno: 357). About 20% of Americans rely on Social Security as their only source of income, within that group of people: 18% are white elder white women, 38% elderly blacks, and 38% Hispanic (Quadagno: 100). Notice how

Privatizing social security can be equally as beneficial as a government ran social security. In addition of companies responsible for pensions could be a citizen saving a certain portion of their pay from working over time which can be utilized to fund their retirement; an option that can be considered ‘private social security’. The argument against citizens saving on their own is most do not plan for their future. Privatized Social Security or mutual fund are a great idea for individuals who do not want to wait for the Government to reform social security benefits. Citizens can invest in savings bond, the stock market, compounding interest saving accounts. Money Market Accounts are a no risk account at a higher than average interest generating rate. The account needs a deposit amount of a hundred to begin accumulating assets (What are). In addition to different accounts citizens can invest into, people can invest into the stock market. Occasionally employers provide discount stock prices to full time employees and this can be used to finance retirements for citizens. Although the stock market is always fluctuating day by day, it is just another option American can use to finance their future retirement. Individuals saving for their retirement at an early age, investing money into a private social security plan, and of course paying into the

When people are asked how people will plan or rethink for retirement, the first thing that people will think about, is saving. There are some positive ways to save money, the author suggests to the readers to sign up for 401(k) plan. It is a plan help employees save for retirement, 401(k) should allow anyone to build up a nice nest egg. For example, “In Dave Ramsey’s The Total Money Makeover, for instance, he gives us “Joe and Suzy Average” who invest $7,500 per year ($625 per month) using their tax-free retirement account. They do this from age 30 to 70, getting 12 percent interest per year. At the end, they have $7,588,545 to their names.” When people invest in 401(k) plan, it is safer and more money in retirement and it also has a benefit that you don’t need to pay for tax when you take the money out. Beside 401(k), people prefer to invest money in the stock market for retirement-plan. According to author “ During a recent 40- year period,

Introduction: By a show of hands how many of you know the dollar amount you need to retire? Most of you want to retire financially comfortable, but have no idea what it will take to make your financial retirement a reality. Therefore, some people are saving on their own or using an institutional savings program. Furthermore, with the life expectancy rate increasing, people are living longer, therefore it is important you make sure you’re planning accordingly for your retirement. Additionally, “according to the National Retirement Risk Index (NRRI), published by the Center for Retirement Research at Boston College, and the Retirement Readiness Rating, published by the Employee Benefit Research Institute (EBRI) conducted in April 2014. These studies suggest that 43% to 52% of Americans won't be able to maintain their pre-retirement standards of living during retirement.”

Planning for retirement should not be based on Social Security alone, but rather by saving portions of personal earned wages and putting finances into long-term investments. Depending on Social Security as the only income after retiring is an unsafe and undependable way to prepare for retirement. People who contribute to Social Security are mandatorily putting money into the Social Security Reserve; this money is used for older generations that will file for these benefits before the younger people working, in the early 21 century, ever receive a chance. Money controlled by other’s hands will never be a guarantee for a secure future, yet money saved by an individual to put toward personal goals will reward greatly. By taking the time to

     As and investor, you are overwhelmed with advice in newspapers, magazines, and mailings discussing what to invest in for a successful retirement nest egg, when to start saving for retirement and who to invest with. There are millions of people who realize that an investment portfolio for retirement is necessary, but do they really understand the investment instruments and the amount they must invest for tomorrow? The subject of retirement is a fascinating area but it also could be a fuzzy subject without the correct amount of knowledge, understanding and professional guidance. The number one question of concern for individuals facing retirement issues is whether or not they