Retirement investment has not changed much over the years. However, due to improved healthcare systems, life expectancy has increased; hence people have to save in retirement investment that can last them in their 90s and 100s. Since I have started saving for retirement early enough, I will likely use Roth Individual Retirement Accounts (Roth IRAs) since they allow an individual to invest extra cash when the income grows in the future.
Retirement investment differs from the level of business or income that an individual earns. When one has a small business, the best retirement vehicle to use is a solo 401(k). This plan is the right direction since it is more flexible and allows the highest level of contribution. The current legal changes have made 401 (k) plan investment vehicles more attractive for small business owners. The "Under the SECURE Act" allows small business owners to plan start-up credit tenfold higher from an initial $500 to $5,000 yearly (Carosa, 2020). Also, this retirement investment is more affordable to launch to benefit an individual and other member, especially the spouse and children. Although investment vehicles are limited for high-income earners, there is a way to optimize money and save enough for retirement. If one works in a larger corporation, the best retirement investment vehicle is Backdoor Roth IRA (Borzykowsk, 2021). Since high incomers cannot contribute to a Roth IRA due to income restriction, they can convert traditional IRA into a Roth IRA.
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The above retirement investments are essential vehicles to keep building wealth to sustain oneself after retirement. 401(k) allows an individual to invest aggressively at a young age and save adequate until they near their retirement age, where they can choose to change their strategy and high percentage in stock investment. Retirement vehicles also allow individuals to have a backup plan if they lose their job early to prevent financial struggle in old age (Borzykowsk, 2021). Lastly, these vehicles allow an individual to have enough saving for their health. Different objectives required different retirement vehicles. Some individuals save for adequate health insurance coverage in old age. Others seek to maximize Social Security benefits, keep debt down, and maximize savings and increase stock for themselves and their families. After reaching 50 years, my retirement planning will change. I will start to go from accumulating assets to the distribution phase (Kagan, 2021). At that time, the focus will be on making a strategic plan to take social security payments, find ways to back spending, and begin listing all retirement accounts saved and adjusting equity allocation to become more conservative.
References
Borzykowsk, B. (2021). The ultimate retirement planning guide for 2021 . cnbc.com. Retrieved 23 February 2021, from https://www.cnbc.com/guide/retirement-planning/.
Carosa, C. (2020). For Small Business Owners Only: Advanced Retirement Plan Options . Forbes. Retrieved 23 February 2021, from https://www.forbes.com/sites/chriscarosa/2020/12/21/for-small-business-owners-only-advanced-retirement-plan-options/?sh=4357c5ba1870 .
Kagan, J. (2021). Retirement Planning . Investopedia. Retrieved 23 February 2021, from https://www.investopedia.com/terms/r/retirement-planning.asp .
