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What is Your Retirement Plan? We Cover the Top Choices

Retirement is far from what it used to be. People live longer and need to plan ahead differently. Here's a rundown of some of the most popular options.
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You Could Live a Longer Life Than You Expect
In the last century, people used to start working in their 20s and then retired at 65. Following this, they would typically have 10 more years of comfortable life living on their pensions.

Now jobs with pensions are not only rare, but people are now commonly living an additional 30 years after retirement. This means some of the conventional retirement plans that might have worked in the past may not be suitable for living in the 21st century.

With that in mind, let's go over some of the more popular choices available for retirement accounts and savings.

Self-Directed 401K Plan
One of the most relied upon retirement strategies today is a self-directed 401k plan approved by the IRS. You have control and flexibility over your investments. It's simple to work with (you just write a check) and there is no need for a brokerage retirement account. A self-directed 401K has all the benefits of a traditional 401K such as tax deferment, but it allows you to decide how your funds are invested.

The strategy works best for self-employed consultants, sole proprietors and contractors.
Roth Solo 401k plan
A Roth solo 401k plan is excellent for self-employed individuals and is an excellent way to build towards retirement whilst minimizing taxes. With this plan, you can make your investments tax-free, and at the age of 59 and a half, you can start living off your investments. Those investments could include precious metals, real estate, private business investments, options, and currencies. You either declare your investments as "after-tax" or convert the funds that are already in your traditional plan to a Roth plan.
Simplified Employee Pension
Another option for retirement savings would be a Simplified Employee Pension or SEP-IRA. What you do is merely contribute up to twenty-five percent of your income, or $55k maximum, for the tax year. If you make this contribution, your taxable income is reduced and it builds your retirement fund. This kind of pre-tax savings can greatly reduce your income tax burden while also preparing you for the future.
Death and Taxes, They Can't be Avoided
The critical thing to keep in mind is that you will be paying taxes either before transferring the money into your retirement account or later when you withdraw your money from it once you're retired.

You need to decide which strategy suits you best since there are both Roth 401Ks and Roth-IRAs available. You can choose to pay the tax on retirement funds now, and let the money grow post-tax in a Roth. Or, you can avoid paying the tax in the short term, get the deduction, and let the full amount grow pre-tax, knowing that you have to pay the taxes later on.

In the end the decision is up to you, so it's important to weigh the consequences of paying tax first, or on withdrawal many years later.