⌄ Scroll down to continue ⌄

6 Retirement Plans Millennials Should Start Thinking About (Or Embrace ASAP)

⌄ Scroll down to continue ⌄
6 Retirement Plans Millennials Should Start Thinking About (Or Embrace ASAP)

Most millennials are still struggling to pay their student debt, so when you tell them to think about retirement plans, most of them are going to tell you to stop mocking them. The reality is, retirement plans are not a priority for millennials, but they should be. Why? Time flies! And starting to save early in life is going to ensure your retirement years are happy years.

Unfortunately, most millennials are afraid of all those complicated words and the sheer length of tax codes, so they need someone to explain these things in plain English. Well, here are the 6 best retirement plans for millennials explained.

⌄ Scroll down to continue reading article ⌄

⌄ Scroll down to continue reading article ⌄

1. 401(k)

The 401(k) is the most popular plan, and most employers offer it, so you can just make a call to the HR department of your company and ask them to solve the papers for you. The maximum revenue is $18,000 per year, and you can pick how much you want to contribute. The contributions are made before the taxes, which are paid when you will take out the money.

One of the major benefits of a 401(k)[1] is the fact that it enables you to grow your retirement plan fast, but you have to stick to the options your employer picked for you.

⌄ Scroll down to continue reading article ⌄

⌄ Scroll down to continue reading article ⌄

2. Regular IRA

If you have a taxable income, or your spouse has one, you are eligible for IRA.[2] With this plan you can earn $5,000 per year, and the contributions are made before the taxes, just like with the 401(k). You are going to pay the taxes when you take out the money.

Of course, this ensures a high growing rate for your fund. Unlike the 401(k), you can invest your money in investments offered by your bank. The cons come with the taxes: because you pay the taxes when you withdraw money, you might notice your tax bracket is higher when you take out the money, so you will be paying more taxes.

⌄ Scroll down to continue reading article ⌄
⌄ Scroll down to continue reading article ⌄

3. Gold IRA

This is not exactly a retirement plan itself, but more of an option to add to your regular plan. Regular IRA and 401(k) are compatible with gold investments. Gold IRA is exactly what you think: investing your money in gold,[3] because its value grows nice and steady over time.

4. Roth IRA

The Roth IRA is dedicated to singles who earn at least $116,000 per year, or couples who earn less than $180,000 per year together. The best thing about this retirement plan is the fact you won’t pay taxes when you take out the money! The contributions are made after the taxes, and you can earn as much as $5,500 per year. Another nice fact is there is no mandatory withdrawal when you are 70 years old, as it is with the other plans.

⌄ Scroll down to continue reading article ⌄
⌄ Scroll down to continue reading article ⌄

5. SEP IRA

As many millennials are entrepreneurs, or they are on their way to becoming entrepreneurs,[4] here are two retirement plans dedicated to small businesses. The SEP IRA allows you to plan for your retirement along with your employees. The maximum amount is 25% of an employee’s compensation, or $51,000. For the employee this plan comes with free money from the employer, and for the employer it comes with tax deductions for the contributions. This is one of the best retirement plans for the self-employed. The con of this plan is the fact that you will pay taxes at the current tax rate when you start withdrawing.

6. Simple IRA

Another IRA for businesses, with a $12,500 maximum contribution. The contributions are taken from the employees salary, and the employer can contribute to his or her account, or to their employee’s accounts. The employee can decide how much to contribute on this plan, and the contributions are made before the taxes. At withdrawal you also pay the taxes.

⌄ Scroll down to continue reading article ⌄
⌄ Scroll down to continue reading article ⌄

With a simple IRA the penalization for withdrawing before 60 years of age can be up to 25%, so make sure you do your calculations right.

Featured photo credit: Unsplash via unsplash.com

Reference

More by this author

6 Less Known Things To See And Do In India
6 Less Known Things To See And Do In India
20 Healthy And Tasty Vegan Breakfasts That Bring You Enough Protein
20 Healthy And Tasty Vegan Breakfasts That Bring You Enough Protein
6 Things You Learn From Winter Camping
6 Things You Learn From Winter Camping
The Ultimate Moving Guide For An Easy Move
The Ultimate Moving Guide For An Easy Move
Proven Benefits Of Having A Beard All Men Need To Know About
Proven Benefits Of Having A Beard All Men Need To Know About

Trending in Lifestyle

1 20 Most Magnificent Places To Read Books 2 The Importance of Sleep Cycles (and Tips to Improve Yours) 3 11 Benefits of Sleeping Naked (Backed by Scientific Research) 4 15 Health Benefits of Coffee According to Science 5 The Ultimate Coffee Guide For Energy Boost

Read Next

Advertising
Advertising

Explore the Full Life Framework

Advertising
Advertising