There are several ways through which a person can start saving for their retirement. Most employers do deduct a part of your payment towards retirement funds on your instructions and invest it. While the amount is collecting, it also earns an interest, and on retirement you get a bulk amount. The best part about this amount is that it is pre-taxed and you do not have to pay anything from that amount provided you take it after you are sixty years old.
Some companies also contribute to their employees' retirement fund either by contributing an equal amount of money or a percentage of the retirement money.
The 401k plan is the most common way of saving for retirement for several people.
There are two to three schemes within the 401k plan like the ROTH IRA or the traditional IRA plans. These plans have different methods of payment. However, with both these plans the key rule is that you can draw the amount only at sixty or retirement. In case you draw the money early you will be paying penalties off your hard earned money. The only exceptions to draw the money are disability, retirement, losing the job and reaching an age of 60. Otherwise, no other reason is considered valid for drawing the money.
Several people actually do not have the access to 401 K plans. Instead they are allowed to take a bulk amount as retirement benefit. In that case there are several mutual funds that are as good as retirement plans and give you a considerable income on a monthly basis.
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