A significant number of Americans prioritize planning for their financial future in a way that benefits their loved ones. Recent findings from an Empower survey reveal that 40% of individuals consider leaving an inheritance as a crucial aspect of achieving a fulfilling retirement. To accomplish this goal, many are exploring options beyond traditional employer-sponsored plans like the 401(k). This article delves into alternative savings methods and investment strategies that can help build a lasting financial legacy, including Individual Retirement Accounts (IRAs), brokerage accounts, annuities, and real estate.
Financial experts emphasize the importance of diversification when preparing for retirement. Relying solely on a 401(k) may not be sufficient due to factors such as healthcare expenses, inflation, and market fluctuations. One recommended approach is to incorporate IRAs into your financial plan. These accounts offer distinct advantages compared to employer-based plans, providing greater flexibility in investment choices. According to Rafael Rubio, president of Stable Retirement Planners, IRAs enable investors to explore a wider range of opportunities to enhance their assets. Additionally, traditional IRAs provide tax-deferred growth, which can influence one's tax bracket positively.
Real estate investments are another avenue worth considering. They serve as a hedge against inflation and can generate passive income. Rob Edwards, founder of Edwards Asset Management, suggests that real estate or similar sources of passive income play a vital role in safeguarding one’s financial stability during retirement years. Moreover, Evan Potash, an executive wealth management advisor at TIAA, highlights the benefits of taxable brokerage accounts. These accounts offer unlimited contribution potential and advantageous tax treatment upon inheritance, making them ideal for additional savings.
Tax-efficient strategies are essential for growing wealth sustainably. Roth IRAs and tax-deferred annuities are two tools that can reduce tax liabilities while maximizing savings. Edwards advises that incorporating Roth IRAs into a diversified portfolio provides more efficient withdrawal options in retirement. For those seeking predictable income streams, annuities present a viable solution, though it is important to carefully evaluate associated fees and terms.
To ensure a prosperous retirement and leave a meaningful financial legacy, adopting a multi-faceted approach is critical. By integrating various investment vehicles such as IRAs, brokerage accounts, annuities, and real estate into your financial strategy, you can better prepare for uncertainties and achieve long-term security. Exploring these alternatives empowers individuals to create a comprehensive plan that aligns with both personal and familial financial aspirations.