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 NOV. 14, 2006
Recommended ways to save for retirement
Many will find this surprising, but a typical Employee pension plan has been found to be the least efficient method of saving for future retirement. Owner-only 401 (k) plans are good for self-employed individuals with a spouse and no other additional employees. Account holders can contribute a maximum of $15,000.00 on an annual basis. All contributions are deferred from taxes. A variety of investment options are available including, real estate, mutual funds and stocks.


The defined-benefit plan may be appropriate for a small business that has any number of employees. Tax deductible contributions are funded by the employer and offer participants a lifetime of monthly payments upon retirement. Higher than usual contributions are offered with this plan and the gains are also tax-deferred.

Another option is the Traditional or Roth IRA which is structured for individuals. These plans are tax deferred. Roth IRA plans offer contributions that are not deductible, however no taxes are incurred on any withdrawals that take place when a person reaches 591/2 years old.

If an investor is utilizing a IRA, it is recommended to use the stretch IRA strategy in order to protect beneficiaries. It is wise to name someone such as your spouse, or children on your IRA. When you pass away, the beneficiary can in turn roll the balance into their own traditional IRA and then name another beneficiary. It is unwise to name a living trust as a beneficiary- this would in turn force your estate to pull the funds out of the trust to pay the necessary taxes.

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