Traditional Retirement Methods

A comment about Roth IRA's.

Roth IRA's are the best gift the U.S. government ever gave us citizens. You put in after-tax money in a Roth IRA investment, (Roth IRA's can be invested in a lot of different ways including real estate), you do not pay tax on the Roth IRA's earnings and you do not pay tax when you with draw the funds (subject to the Roth IRA rules and restrictions). The money grows without a tax liability and is not taxed later. This is a huge advantage. If you do not have a Roth IRA, investigate them. Roth IRAs are a very good deal for everyone with an income under $150,000. For more information go to http://www.irs.gov

The Rule of 72:

The rule of 72 is a math formula that will tell you how many years it takes for money saved at a given interest rate to double. For example: lets say that you are 30 years old and have $10,000 in an Roth IRA earning 10% interest. How much will that $10k grow to be worth when you reach age 65?

Take 10% and divided by 72 = 7.2 years. Every 7.2 years your money will double if invested at 10%. Take your retirement age of 65 less your current age 30 = 35 years to retirement. Take the 35 years and divide by 7.2 = 4.86 times, that your money will double when invested at 10% before you reach age 65. Take $10,000 and double it 4.86 times and you get a total of $297,600. That is the magic of Roth IRAs combined with the magic of compounded interest. Because Roth's are non-taxable, tax liabilities are not considered.

Annuities

Annuities are a common insurance based retirement investment and for anyone who lacks the discipline to save they are good. All I have to say about them is there are far better ways to invest for retirement.

401K

Next best thing to a Roth IRA is a 401K, if your employer matches any part of your investment then they are very good indeed. My advice is to max out your 401K investment. This is a very important asset and you should study the subject. I recently advised my daughter and son-in-law to max their 401K and reduce their Roth IRA to do it. My son-in-law's employer will matched 100% of his contributions up to 3% of his salary and match 50% of the next 2% of salary. That calculates to a 83% return the first year on his contributions from the employers matching alone.

Employer stock purchase plans.

By all means take advantage of any employer sponsored plans. I know one employee of Walgreen's drug stores who accumulated a million dollars of stock using the employee stock purchase plan.

Taxes

Before using any suggestions given here check with your CPA for tax advice. You want to avoid having a tax liability that would reduce your invest-able cash.