The government finds it alarming when consumers fail to arrange retirement savings plans for themselves. They encourage forward thinking because an impoverished old person will have to rely on the state, and could very easily fall between the cracks.
She will be more likely to suffer from poor health and improper nutrition, while housing could be an issue. Charitable housing for the elderly is typically hard to find as the waiting lists are long. The best answer to stave off this kind of situation is for the consumer to invest in a retirement plan such as an IRA or 401k.
When someone plans for the future, he can not only prevent hardship, but also enjoy the freedom which comes with having a steady income. Holidays, home improvements, and fun are all possible. Plan to be comfortable in your old age by partaking in either a 401k or an IRA.
What is a 401k?
A 401k is an employee instigated retirement savings plan. It is directly linked to your job and might not be optional. Many companies simply sign their regular, permanent employees onto the plan as soon as they have completed their probationary period.
What is an IRA?
An IRA is an individual retirement arrangement. Each client is responsible for setting one up on her own, but an IRA manager looks after it on the client’s behalf. Anyone who does not have access to a 401k is encouraged to start one of these.
Limits to Payment
When you open a retirement savings plan, there are certain restrictions to keep in mind. One of them is taxation. There will be taxes charged, but the rules for each sort of plan differ.
There is also a cap on how much money can go into an account yearly. The older you are, the more you can put into either one, but the limits are higher in 401k than they are for payments into an IRA.
Where matching payments are concerned, these only apply to a 401k since they are made by an employer.
Some withdrawals are permitted, though a penalty might be charged. Also, companies are specific about what the money can be removed for and how much. Home improvements and emergency medical bills are just two examples of why consumers might take out a portion of their retirement savings.
Changing from One Plan to Another
How tied down are you to your current employment plan? Limitations are determined by the company that manages your 401k. Typically, there are few limits to what you can do with an IRA. You can change the institution which holds it according to your preferences. A 401k is usually transferable only upon termination of employment. At this point, you can either:
• Move the 401k to an IRA, or
• If you are hired by someone else, transfer 401k proceeds to the new employer’s plan
Investing in Silver and other Precious Metals for your Future
One of the most popular ways to create a safety net for your future finances is to invest in precious metals. Many consumers think instantly of gold, which is a relatively safe bet and continues to be more valuable than the U.S. dollar.
Although it does not earn money quickly, investment over several years will yield a steady and startling return. When the market is unpredictable, silver and a few other metals become reliable investments too, though consumers are often surprised when they learn that gold is not their only option.
It is worth considering silver for your IRA. Its value is more varied than that of gold because it has industrial uses not open to gold. Also, new gold resources are becoming harder to find. Silver can be purchased in similar ways to gold: as bullion, collectible coins, stocks, and ETFs.
An ETF is a share which is managed by a broker. As for bullion, it is essential to buy your metal (whether it is silver or gold) from the right country. Only certain nations create bullion to approved standards of purity.
Precious Metals in your IRA or 401k
Regulations permit consumers to invest in approved sources of silver or gold to fund their IRAs. An IRA has to be set up for the process, so even if you already have an IRA, when you want to add metals, go to your account manager and fill out new paperwork.
He will show you where to find your gold, silver, palladium, etc. For instance, a country’s coins are listed as possible investments if the purity of their metal is up to investment standards. Coins of note come from countries such as Australia, Canada, and the United States.
The choice of which coins to buy is entirely between a consumer and her account manager. Financial pages in major newspapers and on the internet show the small changes in daily rates of exchange for the specific coins available for trade.
A 401k is more complicated in a sense because the account holder is really the company, not the consumer. His access to the account is limited until he retires, unless he is able to roll it over into an IRA. In the meantime, he can find out if the company in charge of his 401k makes gold or silver investments.
It is possible to make recommendations for precious metal investments, but there are no guarantees that recommendations will be taken up by investors. Employers have more control however. They might choose investors according to employee demand.
The Safety of Your Retirement Money
Regardless of the type of pension plan you have (or which you set up for employees), it is essential to research the investment management team thoroughly. There are some who have taken advantage of consumer interest in precious metals and are not behaving in their best interests.
This is true of professionals in any industry: there are always con artists or slightly shady dealers. They might be completely legal in their dealings but not entirely ethical. It is the onus of investment clients to do their own research so that the money they set aside for the future is in the best hands possible.