The three best retirement accounts

People plan to secure the financial future, especially for their old age. No one wants to solely rely on the employer-based pension and Social Security benefits. For hassle-free and financially independent life after retirement, an individual must invest in one of the retirement accounts at an early age. The best retirement accounts are those which have a classic mix of high- and minimal-risk funds and provide proper growth of funds as well as security in case of market fluctuations.

The three best retirement accounts can be categorized as follows:

  • Individual retirement account (IRA): For this type of retirement accounts, the funds are invested individually in a financial institution like a registered brokerage firm or a bank and the fund allotments can be chosen. Some of the criteria for IRA are that the investor must be earning, the withdrawals have an age limit, and the contribution has a capped limit based on the salary of the investor.
  • Employer sponsored retirement plans or 401k: This type of account is offered by employers with the company retirement plan, which allows the employees to deduct a part of their earnings to contribute to the individual retirement account. The investment is not deductible and withdrawals are not taxed after the age of 59 and a half years.
  • Retirement accounts for the self-employed people: This type of retirement account is set up by self-employed individuals or small business owners. This can be single sized 401k-based or IRA-based account. If an individual owns a startup and does not have much savings to spare for an investment then an IRA account can be a desirable choice. The single sized or the solo 401k is generally recommended for an established business owner or a self-employed investor. The investment is not deductible and withdrawals are not taxed after the age of 59 and a half years.

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