How to save for retirement without buying an annuity
Retirement plans that promise to help you retire comfortably without paying a fortune in interest or principal can sound great, but not everyone can afford to buy one.
A new study from the National Association of Retirement Administrators (NAR) says the best way to save is to save a small amount of money and keep it for your own needs and goals.
According to the study, retirees should aim to have a minimum of $3,000 saved for retirement.
If you have $3.3 million saved up, you would need to save $1,500 for every $1 in your savings account, which is roughly $300 a year, according to NAR.
If you have about $4,000 in your retirement account, you’d need to invest that $1 million in a 401(k), which would give you a modest return of 2.2 percent a year.
“Retirees are getting a lot of advice on how to save money.
But, the best advice we can give them is to not get complacent about saving money,” said NAR CEO Michael J. Biesecker.
“Retiree success depends on a lot more than just saving money.
The way to succeed in retirement is to have as much money as you can manage.”
The report suggests that if you have more than $10,000 of income, a traditional 401(p) plan could work well for you.
But a traditional plan doesn’t offer a lot in the way of financial security and the fees associated with one aren’t particularly high.
In addition, a Traditional IRA isn’t necessarily better than an IRA that allows you to contribute to a mutual fund.
For many retirees, a fund will make the biggest difference in their savings and investment plans, according the NAR study.
For more from our retirement experts, check out our What’s a 401K?
series, which includes:What’s the difference between a Traditional 401(d) and a Roth 401(a)?
What are the best and worst 401(s) for seniors?
What is the best tax-advantaged retirement account for those who can’t make more than a certain income?
What can I expect when I start my retirement plan?
How to start a Traditional Retirement Account?