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| Capitalstars Investment Advisor |
1. Pensions
Having A Pension Is The First Thing Most People Think Of They Think Of Retirement Income. Many People Have Earned A Pension At Some Point During Their Working Careers. It Requires Very Little Involvement Because The Employer Contributes The Money On Behalf Of The Employee. You Work, And When You Retire, You Collect Your Pension. These Days Pensions Are Less Popular And Less Generous. They Are, However, Still Quite Common For Government Jobs. The Most Prominent Downside Is That There Are No Cost-Of-Living Adjustments So Your Pension Payment Will Always Be The Same Year After Year During Your Retirement.
2. Defined Contribution Plans
Defined contribution plans are now offered by most employers. There are four primary defined contribution plans, 401k, 403b, 457 and TSP. If you decide to participate in a defined contribution plan, you pick plan options that best suit you and decide how much to contribute. Many employers that have defined contribution plans offer matched contributions as well. For a certain portion that you contribute, your employer will contribute as well (depends on the employer).
3. Individual Retirement Accounts (IRAs)
4. Nonqualified Deferred Contribution Plans
The Nonqualified Deferred Contribution Plan (NQDC) is similarly structured like a Roth but allows greater contribution amounts. For those with higher incomes who have other retirement plans but have reached their contribution limits, the NQDC is an option. Deferring a portion of your income for a later time is appealing as it will grow tax-deferred and will be tax-free in the year you become entitled to it. With an NQDC you have no income restrictions or contribution limits. Another appealing feature is the vast investment options available with an NQDC.
5. Guaranteed Income Annuities
A Guaranteed Income Annuity provides a guaranteed income when you retire. Essentially with this plan, you buy you a fixed monthly payment for your retirement. You can take the income payments as frequently as monthly or quarterly or receive annual payments. It is an investment which you should consider carefully and it’s recommended that you use highly rated companies with a long establishment. Single-Premium Immediate Annuity allows you to invest and take immediate income payments. The deferred-income annuity (DIA) with a cash-refund option is more flexible because you can decide when to start the income payments. Also, the cash-refund option lets you take out the money back.
6. Cash-Value Life Insurance Plan
Many financial advisors highly recommend investing in Cash Value Life Insurance plans because of the ability to accumulate value in a tax-free vehicle. Buying a cash value insurance plan allows you take a loan against your death benefit which can serve as income during your retirement. For example, a $500,000-dollar policy could provide you with a loan of $250,000 and can be paid out as a lump sum or in several withdrawals. The loan is repaid from your death benefits, leaving your beneficiary with the remaining $250,000. The loan is tax-free and can serve as an excellent retirement income for an unemployed spouse as well as providing life-insurance coverage.
7. Real Estate
For those who don’t mind managing and the work involved with real-estate investments, it can provide a substantial income flow. This holds especially true for those who haven’t saved much and are fast approaching retirement. Keep in mind, if you have mortgage-debt the property income should cover all your costs including mortgage payments, tax, and property maintenance. A financial advisor such as a Registered Investment Adviser (RIA) with experience investing in real estate can provide valuable guidance should you choose to invest in real estate. They can help you balance the risk with a property that can give you the highest revenue gains.
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