Take Your Retirement Savings From “How? to Wow!”

We all know that there are certain evergreen financial moves we can make to increase our retirement savings. We can put more money away into our retirement accounts, work longer to delay depleting these accounts, and maximize employer matches by contributing more to our 401Ks. But is that really enough? Or is this old tried and true advice quickly becoming outpaced by inflation, rising tax rates and lowered investment growth?

A Better Solution

Rather than taking the same old path to retirement savings it is time we realized that the way our respective generations retire is going to be different from the generations that preceded us and that means we have to adjust our approach and place as much attention on WHERE we are investing as we do what we are investing.

Following this line of thought, you might consider the following:

ROTH IRA: A ROTH IRA is a flexible solution that allows you to accumulate tax-free growth on after-tax dollars. There are no required minimum distributions at a particular age but you can begin taking tax-free distributions if you choose to at age 59 ½. With a ROTH IRA you do not need to worry about what portion of your retirement income is going to go toward taxes no matter how high they get. Keep in mind that you must follow contribution guidelines and income restrictions which can change annually.

Permanent Life Insurance Policies: Permanent life insurance policies like-equity-indexed, universal and variable policies-allow you some cash value accumulation as part of your premium payment as well as some tax-deferred returns based on the performance of the sub-accounts you choose. Once you have accumulated enough cash you can take tax-free loans to assist in your retirement. In addition, if your heirs have no need for the death benefit, you can sell your policy as part of a life settlement to raise necessary funds that exceed your cash values.

Annuities: If you are concerned about outliving your retirement savings then you might want to consider buying an annuity for your IRA. With an annuity you can get a guaranteed death benefit, guaranteed growth, guaranteed minimum payments and annual distributions for the rest of your life-even if the value of these distributions exceed your principal and growth. Benefits, distribution terms, growth and guarantees will depend on the type of annuity you choose.

So remember, it is not always about how much you save but where you are saving it.   The right retirement savings plan will help you find investment vehicles that offer you some insulation from future tax liabilities and offer you some growth or hedge against the possibility of outliving your retirement savings.

Another great post here,  written by Yolander Prinzel (www.YolanderPrinzel.com). She is a financial writer as well as a series 7, 66 and 2-15 licensed representative. During her decade of financial industry experience she has been an insurance agency director of marketing and director of operations, a life insurance underwriter, and a trading service specialist for Raymond James Financial Services. She was a featured speaker at the 2006 Hartford National Sales Conference and the 2006 Brookstreet Securities Annual Conference.