If you’re one of the many who have decided to put off retirement or you’re simply not quite there yet, Garner News offers a couple tips on how to prepare for retirement at the last minute.
If you have no employees other than your spouse or a partner, you can establish an “owner-only†401(k), also known as an individual 401(k). This plan offers many of the same advantages of a traditional 401(k): a range of investment options, tax-deductible contributions and the opportunity for tax-deferred earnings growth. You may even be able to choose a Roth option for your 401(k), which allows you to make after-tax contributions that have the opportunity to grow tax free.
By establishing a defined benefit plan, you’ll be providing yourself with a monthly payment (or “benefitâ€) for life, beginning at the retirement age specified by your plan. In 2011, the yearly benefit limit is $195,000.
The amount you can contribute to your defined benefit plan each year is based on several variables, including your current age, your compensation level and your retirement age. But you’ll certainly be able to contribute large amounts: A defined benefit plan is the only retirement account that allows contributions in excess of the limits placed on 401(k)s and other defined contribution plans. Generally speaking, the closer you get to retirement, the larger your maximum yearly contributions will be.
Photo by Steven Depolo