When it comes to Americans saving for retirement, there’s some good news and some bad news.
First, the bad news: Research conducted by Fidelity Investments has determined that over half of all Americans have saved less than $25,000 for retirement, and about a quarter of Americans have less than $1,000 in retirement savings.
Now, the good news: The government has made it easier than ever to save for retirement by opening a qualified retirement savings account. This is true whether you work for a small or large employer, or are self-employed or own your own business.
Following is a look at the most popular retirement savings accounts in America today:
Individual Retirement Account, or IRA (both traditional and Roth)
IRA's were the first government-sponsored, tax-advantaged vehicle to help Americans save for retirement. Traditional IRAs offer tax-deferred growth and a tax deduction for individuals who qualify. The maximum IRA contribution amount in 2013 is $5,500, or $6,500 if you are 50 years of age or older.
Roth IRAs, meanwhile, offer no immediate tax deduction. However, contributions grow tax-free, instead of just tax-deferred, with no taxes due when the money is withdrawn at retirement. Note that Roth IRA eligibility phases out above certain adjusted gross income (AGI) limits.
This is a unique type of IRA that, as the name implies, holds gold as its primary asset, instead of stocks and bonds, like most other IRAs. A wide variety of different kinds of gold investments — gold bullion and coins, gold company stocks and mutual funds, gold futures, etc. — can be held within a Gold IRA. The annual contribution limits for Gold IRAs are the same as with traditional and Roth IRAs. Learn more about them here
401(k) plan (both traditional and Roth)
This is a very popular retirement savings vehicle among many employees, since it enables employees to make matching contributions to their accounts if they choose. In 2013, you and your employer can contribute up to $17,500 combined, or up $23,000 if you are 50 years of age or older. Like IRAs, 401(k)s are also available as either traditional or Roth accounts, with the same tax-deferred and tax-free features.
Simplified Employee Pension plan (or SEP) and SIMPLE IRA
These are used primarily by self-employed individuals and employees who work for small businesses. The SEP contribution limit in 2013 is 25% of compensation or $51,000 (whichever is less), while the contribution limit this year for SIMPLE IRAs is $12,000, or $14,500 if you are 50 years of age or older.
An annuity may allow you to receive a fixed amount of income for a pre-determined length of time, which may make it a good retirement savings vehicle. There are two main types of annuities: fixed and variable. A fixed annuity pays a certain amount of money on a future date, providing a degree of certainty with regard to retirement income. The future value and income of a variable annuity, however, will depend on the performance of sub accounts (investments similar to mutual funds) within the policy.
Why Gold IRA's are Attractive Now
There are several characteristics of gold as an investment that make Gold IRA's an attractive retirement savings vehicle today. For example, buying gold should be a long-term “buy and hold” strategy. While the price of gold fluctuates in the short term, gold has historically proven to be a wise long-term investment. Consider that gold closed at $1,403 per ounce on August 26, 2013, which was up from an average price of $1,225 in 2010 and just $363 a decade ago in 2003.
In addition, gold has traditionally been a good inflation hedge — and many economists are predicting that inflation could soar in the future when interest rates start to rise. If you currently own gold, it can easily be rolled over into a Gold IRA. And if you own a traditional IRA or 401(k), these assets can also be rolled over into a Gold IRA.
There are many potential benefits of Gold IRAs as a retirement savings vehicle. In today’s uncertain economy and volatile investing environment, you owe it to yourself to carefully investigate these benefits and determine whether investing in a Gold IRA might be the right retirement strategy for you.