Recent news reports have been full of dour news about the state of retirement savings in the United States. Many of these reports have focused on the news that many people have neglected saving for retirement at all, focusing their finances on immediate needs instead of planning for the future. Fortunately, there has recently been some good news about Americans and their retirement savings. A new analysis from Fidelity Investments is showing that more people are saving for retirement than ever before.
The analysis from Fidelity found that over a million people have increased the amount of money they were saving in their retirement accounts administered by the firm in the first quarter of 2015. Nearly a quarter of these account holders were saving more money in the accounts in 2015 than they were saving in the accounts during the same time period of 2014. The balance of the retirement accounts held by Fidelity have hit new highs due to the increased contributions.
If you have not yet begun saving for retirement, there is no better time to start than now. There are many different methods for saving for retirement available and each method has benefits and restrictions that must be taken into account before you decide on which method to use. Using these retirement saving accounts correctly can help you save hundreds of thousands of dollars for retirement over the course of a couple of decades. Here are some of the best methods for saving for retirement.
401(k) plans are employer sponsored retirement plans that allow account holders to divert a portion of their pre-tax income into an interest bearing investment account. The investments available for these plans are limited, but often have lower fees than the investments that you could find with a broker. One of the best things about 401(k) plans is that many employers offer matching funds for them, giving you free money just for saving for retirement.
Individual Retirement Accounts
Individual retirement accounts (IRAs) are another good method for saving for retirement. These accounts are funded with after tax dollars and grow tax free until the money is withdrawn during the account holder’s retirement years. IRAs have lower maximum annual contributions than 401(k) plans, but they are a great alternative if you do not have access to a 401(k) account at your employer.
The myRA plan is a retirement plan offered by the federal government for workers that do not have access to a retirement plan through their employer. The plan helps workers save for retirement by investing in special US Treasury bonds and the principal and earnings can be withdrawn at any time without incurring taxes or penalties. Although the plans have just recently been launched, they are expected to eventually help up to fifty million people start saving for their retirement.
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