Adequately preparing for retirement is a thought that crosses the minds of many investors, regardless of their ages. If you already have the traditional retirement accounts, such as a 401(k), individual retirement account (IRA), or 403(b), you may wonder what other options are out there to help you prepare for retirement. Here are a couple non-conventional options that you can use to help save for your retirement.
Purchase an Annuity
An annuity is a financial product that, after a stated period, provides you with a stable monthly income. Instead of making regular contributions (like you would with a 401(k) account), you purchase the annuity with a lump sum of money. The money that you use to purchase the annuity will then grow until you start taking distributions from the account. If you access the annuity before you are 59.5 years of age, you can expect to pay penalties for using the money before you are of retirement age.
The amount of interest that you earn on your money depends in part on the type of annuity that you buy. A fixed annuity provides a guaranteed interest rate that remains the same for the life of the annuity.
If you opt for a variable annuity, you are basically investing in a mutual fund within the annuity and your interest rate will depend on the performance of this fund. You can also choose a fixed index annuity. This product's interest rate is based on the performance of a stated mutual fund. However, you are guaranteed a certain amount of interest each year, regardless of how the fund performs.
Fund Your Health Savings Account
Most individuals do not consider a health savings account (HSA) as an option when deciding how to save for their retirement. However, it can be an excellent way to help you pay for your medical expenses once you retire.
As of 2018, you can contribute $3,450 each year for a sole HSA or $6,900 each year for a familial HSA. One of the best aspects about an HSA is that you do not have to use your contributions in the same year that you make them; instead, they roll over to the next year.
You also earn interest on the money in your HSA. Many HSAs also give account holders the option to invest the funds in their HSAs once the balance reaches a certain level. This can help you achieve a higher return so that your money achieves its full growth potential.
The money that you put into the HSA is pre-tax; this means that your contributions will also reduce your current taxable income. Contact a service, like Resource Insurance and Financial Group, LLC., for further help.