Supplemental Retirement Plan
August 29, 2008
If you are sensible and a planner you will want to start sorting out your retirement as early as you can. A supplemental retirement plan will give you the financial security that you need when you get older and you can request one from your work place.
Here’s a basic run down of how a supplemental retirement plan works: You agree to save a certain amount towards your old age direct from your paycheck and the Government doesn’t tax the money as a reward for planning ahead. The taxes are deferred until you actually withdraw the money later in your life.
Last year you could only deposit a maximum of $15k into your supplemental retirement plan but that number varies every year. Most places of employment match you dollar for dollar so whatever you add into your account, they will too. This can quickly grow to a substantial sum and will mean you will be self sufficient come retirement age.
Your savings don’t just sit tight in a bank. You will have to decide whether you want to invest in stocks, bonds, market funds, real estate etc. A lot will depend on how much you are saving per year and be aware that some of these options come with management fees so you will need to take these costs into consideration when planning out exactly how much you will have to come when you retire.
To get started, ask at your place of work about a 401k form. When you are investing though, it is always best to meet with an accountant or financial advisor to make sure that you are making the right choices with your money, and to learn ways to tell whether or not your money is growing for you.
One of the biggest plus points of a supplemental retirement plan is that nothing is set in stone. You can change the amount you invest each year, even each month if you wish. People find this flexibility comes in handy at certain points in their life. A wedding coming up, a first born due etc. For more information on how a supplemental retirement plan works for you, visit www.fidelity.com.
Tags: retirement planning, Supplemental Retirement Plan
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