Planning for retirement through personal retirement accounts

Retirement is a word that everyone has thought of either as something daunting or something to look forward to. Regardless of the approach, retirement entails a whole new lifestyle, and along with this lifestyle change, numerous other factors also come into play. Many start to prepare for retirement much ahead of the actual retirement age, and this is largely a good idea.

An integral part of this is the financial situation at hand, and what exactly to do with the funds that are received. With many companies no longer providing pensions, and Social Security schemes coming under scrutiny for their efficacy, alternate means of finance is often considered to be a must. While numerous options are available, personal retirement accounts are widely regarded as the best, most effective option.

Personal retirement accounts are those that are created and controlled by the account holder, and subject to tax advantages from the IRS in order to encourage further savings. Funds can accumulate in these accounts in numerous ways, ranging from stocks and bonds to investments in gold and other such valuable commodities.

These personal retirement accounts gained popularity along with the 401k plan, which involves using an account that is opened and administered by the employer, but ownership is maintained by the employee. The contributions made towards this 401k are non–taxable, increasing the benefits of opting for such a plan significantly.

Personal retirement accounts may also take on the form of traditional Individual Retirement Accounts, or IRAs. While it possesses a limit on how much contribution can be made to these accounts, the funds that are contributed remain non–taxable. The primary difference between this account and the 401k plan is that this is set up individually with a bank or other such financial institutions, and maintained completely by the account holder.

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