Which retirement planning solutions will work for you? Only those solutions where you are actively involved!
Retirement planning is so vital to your own survival that you cannot afford to outsource it completely. On the other hand, it is my opinion that retirement planning is too complex and specialized to try and fly it on your own.
On this website we urge visitors to educate themselves, to understand all phases of retirement planning, and to eliminate uncertainty. Only then can you take control and choose from possible retirement planning solutions.
As a start you'll optimize and understand your existing retirement provision plans. You'll make sure that you squeeze the maximum benefit from these plans as far as deferred taxation on contributions and income is concerned. But formal retirement provision plans are the easy part of retirement investment planning.
The more challenging part is where you need to invest your already taxed money effectively to achieve your savings goal by the time you retire. This is the stage where you'll need some help and where you need to consider some solutions.
I think there are roughly three solutions to consider:
Retirement annuities seem to have a bad reputation. However, when you've subscribed to all possible tax advantaged contribution plans and you still need to save towards a retirement account, a retirement annuity can be a serious option.
This type of investment allows your money to grow in a tax-deferred way. That growth is taxed at ordinary income tax rates on withdrawal. You can 'buy' the annuity with a lump sum or you can invest an amount on a regular basis.
Retirement Income Funds
Retirement income funds fill the gap between having your personal retirement investment advisor, who manages your portfolio and portfolio distributions, and income annuities.
These funds offer flexibility and personalization and emphasize convenience, cost, and growth potential. They are professionally and actively managed without the direct expense of a personal investment advisor. However, it is up to you to do the research of the available funds and to finally decide which fund fits your personal risk tolerance profile. You'll have to study each fund's asset allocation to determine how conservative or aggressive that fund is.
The ideal of all retirement planning solutions would be to have a fee-only, experienced, and independent retirement investment advisor. He or she should not have any products to sell you, not get commission or fees on any investment proposed, and offer you focused and personalized retirement investment solutions.
A word of realism though. Your advisor will not always beat the markets or fund performances. Set your risk tolerance on conservative. Question and understand the investment strategy and every investment proposal. But don't expect your portfolio to be recession or depression proof!
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