Retirement is a bit like a double-edged sword. It can be both frightening and very exciting. The thought of spending the rest of your days only doing the things you love is appealing to just most folks.

Sure, there are going to be times when you might burn out and feel restless, but this is better than heading into the office and working your fingers to the bone for 8 to 10 hours a day.

All that being said, retirement is not what it used to be. There was a time when people could just simply rely on employee pensions and social security.

Unfortunately, with the rising costs and unreliability of social security, this is no longer the case. This is why it is more important than ever to not only understand the options available to you but to understand that you need more than one retirement plan. Never put all your eggs in one basket because there is no guarantee that it will pan out.

Understanding The IRA

Retirement Plan

The IRA is without a doubt one of the most popular retirement plans out there. Any individual in the world can get in touch with a financial institution like a bank or brokerage firm and open one of these accounts. These accounts can hold your investments, stocks, mutual funds, bonds, and cash that you have set aside for retirement.

However, it is also important to remember that some IRA accounts only allow individuals to contribute so much money yearly. In addition to this different IRA accounts are taxed differently.

A traditional IRA is more suitable for the current workforce because they require you to have earned income in order to contribute to the account.

Spousal IRA accounts can allow nonworking spouses to accrue tax-advantaged retirement savings but subject the contributing party to the same limits the working spouse.

Employer-Sponsored Retirement Accounts

If you are like most individuals, you probably know that you need to start your retirement planning early, but lack the information to do so. This is even true for individuals that are currently enrolled in employer-sponsored retirement accounts.

You might be contributing a portion of your check towards retirement, your employer might be even matching the amount deposited, or you might not even be enrolled in the employer-sponsored retirement accounts.

Whatever the situation is, you need to truly sit down and look at what retirement plans your employer is offering and which are best for you.

Living Comfortably

Charles Schwab recently released a report that revealed only 60 percent of people do not have a retirement plan. In fact, all of these individuals are living from paycheck to paycheck.

Another 25 percent have already taken the time to create a financial plan for their retirement. The people who do not have a financial plan in place when they reach retirement age may not be able to retire at all. This is why many seniors past retirement age continue to work until they are no longer able.

Living comfortably after retirement will depend on the type of retirement plan you choose. Regardless, if you believe you are financially stable enough to make it after retirement without a plan, you may find out later on that you were totally wrong.

Social Security And Medicare

According to the Social Security Administration, as of May 2019, 48,666 people 65 and older were receiving Social Security or Supplemental Security Income.

Of all age groups, 68,535 were receiving either Social Security or Supplemental Security Income. Out of that group, only 5,386 people were receiving Supplemental Security Income. The remainder were receiving Social Security benefits.

Many people are basing their retirement plans on Social Security and Medicare benefits. These individuals have already planned to claim their benefits as soon as they turn 65 years of age. Nearly 30 percent of the people living in the United States plan on claiming Social Security and Medicare benefits as well as Pension.

Working Past Retirement

According to Charles Schwab survey, nearly 67 percent of those surveyed plan on working past the retirement age. The only problem with this plan is the possibility of a health crisis. People who plan on working past the age of 65 should definitely take this into consideration.

A health crisis could lead to a layoff and then your entire retirement plan would be flushed down the drain. With that being said, you should definitely consider having another retirement plan. You just never know what is going to happen so it is best to be prepared for anything that could come your way!

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Author: Shakshi Talwar

About the author

We do extensive research and share latest small business ideas, future trends and insights exclusively on Fincyte. Stay Tuned!

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