10 Alternative Retirement Plans You Need To Consider [For Better Future]

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  • Post last modified:October 17, 2021

Retirement is the time when one no longer wishes to (or can) work for a living, and therefore must plan for their future. However, it isn’t easy to accomplish this for many.

One of the primary reasons is because not all employer offers retirement savings benefit such as 401(k) plan which is a defined contribution plan where the employer may contribute money to the employee’s retirement savings account.

While pensions and social security are ideal for retirees, the two aren’t sometimes enough for a comfortable retirement.

However, there are alternative options to supplement an existing income for future retirement.

10 Alternative Retirement Plans To Consider

If you’re looking for some alternative retirement investment plans to supplement your income, then this article is for you. Read on as it lists down the 10 alternative retirement plans you might want to consider.

#1. The Gold Individual Retirement Account (IRA)

IRA

The Gold IRA is a traditional individual retirement account backed by precious metals rather than stocks and bonds.

Unlike the 401(k)-plan provided by employers, an IRA is one you set up for yourself, giving you more freedom on choosing investments rather than being limited to a few options provided by an employer.

Traditional, Roth, and SEP are the types of Gold IRA you can choose.

  • Traditional Gold IRA

In the traditional Gold IRA, contributions are tax-deferred, so withdrawals are taxable in the future. Similar to a Traditional IRA plan, you’re not allowed to withdraw it until you turn 59 ½ years old or later.

Otherwise, a 10% penalty will apply to every early withdrawal.

  • SEP Gold IRA

The Simplified Employee Pension (SEP) Gold IRA is a Gold IRA type that uses the same rules as the SEP-IRA plan, where contributions aren’t taxable until withdrawal and have a higher contribution limit than the Traditional Gold IRA.

A SEP Gold IRA plan allows business owners to invest in retirement savings for themselves and their employees.

  • Roth Gold IRA

The Roth Gold IRA works like the Roth IRA plan, which allows people to invest after-tax dollars. Contributions are taxable, but earnings and withdrawals in retirement are not taxable.

Over the years, gold has been a relatively stable investment for many, as it tends to rise when other assets are taking a downturn during a market crash.

Thus, investing in a Gold IRA became one of the best options for many investors to diversify their retirement portfolio as it seems to provide long-term security.

#2. The Roth IRA

Roth IRA

A Roth IRA is another type of individual retirement account. Unlike the Gold IRA, which allows people to invest in physical gold, Roth IRA is a retirement account backed by conventional assets such as stocks and bonds.

Earnings and withdrawals on Roth IRA accounts are tax-free after the age of 59 1/2. However, to withdraw earnings before that age, there’s an early withdrawal penalty that will apply.

Many investors believe that Roth IRA is a good alternative for those who’ll start investing early as Roth IRA is suitable for a long-term investment (decades) to maximize the compounding power of your assets.

#3. Traditional IRA

IRA Traditional

Traditional IRA is a tax-deferred retirement account in which individuals can contribute a certain amount annually to their IRA accounts to provide additional income when they retire.

Like any other retirement plan, Traditional IRA also has its limitations—investors need to know how much money they can contribute yearly based on their age bracket.

However, unlike Roth IRA, where withdrawal is tax-free, Traditional IRA distributions are subject to income taxes regardless of your age at the time of withdrawing money.

The good thing about a traditional IRA is that it deducts your contribution (limited at $6,000 annual max) amount from your taxable income plus your investment earnings are tax-free as well until you make withdrawals upon retirement.

#4. The SEP-IRA Plan

SEP IRA

The Simplified Employee Pension Plan (SEP-IRA) is for those who run their own company or business. The business owner sets SEP IRA plans, allowing them to contribute annually to their retirement plan.

SEP-IRA almost works the same as the Traditional IRA. The only difference is the dollar limit of contributions an individual can make annually.

Compared to Traditional IRA’s $6,000 annual contribution, SEP-IRA allows business owners to contribute 25% of their salaries or $58,000 annually, whichever is less.

#5. Solo 401(k) Plan

solo retirement

If you’re a business owner with no full-time employee, you have the option of establishing a Self-Directed Solo 401(k) plan for yourself.

It’s an extension of the traditional 401(k) plan provided by employers, except that with this account, you’ll be in charge of your investments rather than relying on an employer.

Thus, the Solo 401(k) plan allows the investor to contribute as an employee and an employer. Your employee contributions to a Solo 401(k) plan are only allowed up to a specific dollar amount or 100% of your salary (whichever is less).

If you are 50 years old, you can also contribute an extra $6,500. Your employer contributions are also tax-deductible and are allowed up to 25% of compensation.

The Solo 401(k) plan is an ideal option for full-time employees who have a small side income because it allows you to contribute to your retirement account tax-deferred twice (as an employee and employer).

#6. Health Savings Account

HSA

Medical expenses are one of the most common reasons for bankruptcy in most countries. That’s why health savings account (HSA) became popular to create a medical fund for their future.

However, many didn’t know that health savings accounts aren’t just for medical expenses but also great options for tax deductions.

All of the money invested in a health savings account is tax-free, including the interest or your earnings on the funds invested.

Yes, a health savings account can be an investment account (where you can earn interest) which you may contribute until you enroll in Medicare when you turn 65.

The main advantage of having an HSA is that you can save money for medical expenses tax-free. Plus, once you turn 65, you’ll have the freedom to use it for non-medical purposes as you please without any penalty.

#7. Invest In Real Estate

invest in real estate

For many, investing in real estate is yet another great way to invest in their retirement fund. Even though you might need to spend extra every month to pay the mortgage, real estate properties can appreciate over time, especially when the market is strong.

Owning a rental property also has tax advantages. As a landlord, you can lower your tax bill by taking depreciation as an expense. That means you’ll have a lower taxable income and might be able to reduce your tax liability.

Plus, it’s a passive income that will give you a steady cash flow which is just exactly what everyone needs upon retirement.

#8. Taxable Brokerage Account

tax

A taxable brokerage account is an investment account ideal for retirement goals and short-term financial goals.

Unlike traditional retirement plans like 401(k)s, 403(b), and IRAs that offer tax deductions and tax-deferred growth, taxable brokerage accounts do not offer you tax deductions.

However, they allow you to invest and withdraw the money as needed without any penalty and age requirement.

Although a few brokerages may require a minimum deposit amount to open an account, many allow everyone to open an account, no matter how little they invest.

Plus, there’s no income requirement, so you can start investing whether you’re still working or retired. Plus, there are no contribution limits which means you can keep investing as much as you want.

#9. Invest On Others Business

business

Investing in someone else’s business is a great way to diversify your portfolio and give you a steady passive income. Many start-up companies are willing to provide a percentage of their business in exchange for the initial investment.

It’s an arrangement that both parties benefit from it. If you have limited funds to invest, you may want to try crowdfunding or join investment platforms connecting investors and entrepreneurs.

However, you’ll want to be cautious when choosing this option as it has more risk than the retirement plans mentioned above.

There’s no guarantee that the business you invest in will flourish and give you profit, so it’s best to do thorough research before investing.

#10. Invest In Digital Currency

digital currency

Digital currencies are becoming a popular trend for investment. There is risk involved with digital currency investment, but many believe that the profit potential is higher than any other investment plan.

However, if you will choose this option, double-check that you understand how it works. And although digital currencies can give you a lot of advantages, some countries don’t recognize them, and no government entirely regulates them yet, which means there’s no law on how it operates.

Even though other digital currencies may provide high profit if you invest long-term, many fluctuate in prices which may cause you to lose all of your investment.

Final Words

Retirement is something that everyone wants to enjoy, but many are still confused about starting to save for it.

By investing in the right plan at the right time, you’ll be able to build a solid nest egg that will provide you with income during your retirement years.

No retirement plan or investment is fail-proof, but if you understand each plan, then you’ll have a better idea of which one to settle.

If you have the opportunity to take advantage of all the plans, then, by all means, do so as they all have their benefits. Just remember to do thorough research and understand how each one works before jumping in.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.