1. Start early. You should start contributing to an Individual Retirement Account as soon as you start working. IRAs (Traditional IRAs) are named for an actuary, Ira Cohen. You may contribute up to 100% of earned income, or $4000, for 2009, the greater of the two amounts. For investors aged 50+ who are catching up, you may contribute 100% of earned income or $5000 (the greater of the two). A qualified self-directed account will allow you to buy securities you like. Investments grow tax-deferred in an IRA account. When funds are withdrawn from your IRA, starting penalty-free at 59-1/2, the distributions are taxed at present tax rate. The goal is to invest money on a tax-deferred basis in prime earning years, and withdraw the funds in a lower tax rate. You must begin taking distributions from your IRA by April 1st of the year you turn 70-1/2.
2. Pay yourself first. Every pay period, reserve money for your retirement plans. If you have reached the maximum IRA contribution, and you are age 60+, you may add $1,000 to a Roth IRA . This IRA is funded with after-tax dollars. Investments appreciate on a tax-deferred basis and withdrawn tax-free. Add a Roth IRA at the advise of your financial planner. Take advantage of your company's 401K plan and any matching contributions your employer makes.
3. If you are self-employed or have employees, start a SEP IRA.
This option allows you to make retirement plan contributions for an IRA established for your employees and you rather than a pension fund account created in the company's name (requiring testing to establish validity). SIMPLE IRA is a simplified employee pension plan allowing employee and employer contributions: this form of pension plan is like a 401K without required costly testing.
4. Pay off your home mortgage. Double your payments and own your home faster.
5. Ensure housing costs are less than or equal to 25% of current income. Save according to your goals.
6. Consider moving to a lower cost area at retirement.
7. Buy long-term care insurance. This is one of the smartest investments ever.
8. Review insurance investments. You may not have enough (review estate settlement).
9. Think second or third career after retirement. If early retirement is a possibility, consider taking the deal and spreading your wings.
10. Save vigorous good health with nutrition and healthcare now.
Enjoy retirement!