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> Overview
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DEFINITION:
An investment earmarked for funding your living expenses after retirement

PROS:
Saving while young drastically reduces the amount you need to put away when older; offer great tax benefits

CONS:
Retirement saving may cut into how much can be saved for other goals; access is usually restricted until age 59½

Overview

Although growing old isn’t on most people’s wish lists, they do dream of retirement and the freedom to do what they want every day. To reach that goal, you need to save and invest for retirement. There are a wide variety of retirement accounts that can help make that dream a reality.

There are retirement accounts for:

  • Individuals
  • Employees
  • Businesses, even if it’s a one-person company

Generally, you may contribute to more than one type of retirement account if you meet the requirements.

A qualified retirement account receives favorable tax treatment. These tax breaks enable you to save for retirement without having taxes impede your progress.

When you’re saving on your own for retirement, individual retirement accounts (IRAs) are one of the most popular options. To make an IRA contribution, you must have earned income such as:

  • Wages
  • Salaries
  • Tips
  • Commissions
  • Self-employment income

Types of Accounts >>