Traditional IRAs: great option for middle and lower classes individual who is not part of a pension plan where they are employed. The contributions are deducted from your taxable income. No taxes are charged on that it is time for it to be withdrawn. You can only withdraw over 59 years and 6 months old, or if you become disabled or another unique circumstance. You may not hold off on contributions beginning at 70 years and 6 months.
Roth IRAs: usually for middle and upper class individuals. This money is after tax, but you never have to pay taxes on the earnings and can begin withdrawing at age 50 and 6 months. The money never must be withdrawn and can be bequeathed upon your death.
Non-deductible IRAs: You can postpone taxes on the earnings until your withdrawal at time of retirement or disability.
KEOGHs: Self-employed people, particularly freelancers, can put a specific percentage (government mandated) into their account into the tax-deferred KEOGH account. There are many different types of KEOGHs and are very similar to the IRAs you would have working for an employer. See if you can get advice from a financial planner before choosing a KEOGH account.
401 (k)s: These retirement accounts are offered by most private companies. With them, you pay in a specific amount of your pre-tax income. Most employers will offer some form of matching plan that you should fully take advantage of. You usually can roll over your 401K to another employers plan should you leave your current position. Nothing is taxed from this type of account until you withdraw the money, which must be done after you are 59 years and 6 months old. In a 401k you will be asked to choose what type of investment you would like to be in. I often recommend someone who doesn’t have the interest in managing this investment to simply select a term fund based on their year you will retire – say 2045 – and then the fund automatically adjusts your account based on the different risk profile you have as you age.
403 (b)s: Very similar to 401ks, but are for people working for the public sector, including nonprofits. These plans are similar to 401ks.
Variable annuities: If you still have an amount of money to invest after maxing out the accounts above, you may want to look into investing in some variable annuities.