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Less than 20% of American companies offer traditional pensions anymore, leaving many workers to fend for themselves when it comes to planning and saving for their retirement. Fortunately, there are several options for people who needs to provide for their own retirement, including 401(k)s, IRAs, annuities, and taxable investments.

Employer-Sponsored Plans

Accounts such as 401(k)s and 403(b)s have replaced traditional pension plans at many employers. These plans are essentially employer-sponsored investment accounts. Employees can choose to contribute a portion of their pay check to the account, and many employers choose to match this amount. The money can be directed into a variety of investment options including stocks, bonds, and/or government securities. Any money deposited into these accounts is not taxed, nor are any gains that are seen by the investments. Withdrawals can begin when a person is 59 ½. Prior to this, any money that is taken out of the account must be rolled over to another retirement account or tax penalties will be assessed.

Self-Directed Retirement Accounts

Individual Retirement Accounts, or IRAs, can be valuable retirement tools for people who do not have access to employer-sponsored plans and/or simply wish to set up their own retirement accounts. These accounts can be set up through most banks or brokerage companies. There are two main types, IRAs and Roth IRAs. An IRA has no contribution limits, and any money deposited to the account is not taxed. Withdrawals, however, are taxable and can only start once an individual is 59 ½. Withdrawals must start by the time an investor is 70 ½. Roth IRAs, on the other hand, have annual limits of $5000, and all contributions are taxed. The investor can withdraw their original contributions at any time, however, without having to pay tax penalties. In addition, the money can be used to pay education and retirement expenses when it is invested in a Roth IRA. Any gains or profits made in both kinds of accounts are not taxable.

Annuities

There are many different kinds of annuities on the market. You can work these out using a annuity calculator. These products are usually sold through insurance companies and provide either a lump sum or monthly payments to an investor. Investors can pay a set amount every month towards an annuity, or roll-over their savings from one of the previously mentioned plans into an annuity. Many people like the guaranteed payments offered by these plans.

Taxable Investments

Of course, it is possible to save for retirement simply by saving money. For many years, individuals and couples have socked away money into savings accounts, CDs, bonds, and stock funds. There are no limits on how much one can invest, and money can be withdrawn at any time for any reason. There are no tax advantages to this, however.