Are you approaching the age of 60? Do you want to quit form work and enjoy a stress free life? Do you want to have financial freedom in your retired life? If “yes”, then you need to do some retirement planning from today, to ensure your financial security in the near future.

You must have your own dreams how to spend your life after retirement, but, you need to be ready for are some events which may crop up suddenly. You need to do a sensible financial planning. There are many retirement accounts which are sanctioned by the government, which helps your saving to increase by providing tax deferral.

Government sponsored investment accounts

The 2 most notable government sponsored investment accounts that are good for retirement planning are:

401(k): This is a voluntary investment account that will be offered to you by your employment company. Under this plan, you have to contribute a percentage of your pre-tax income to your 401(k) account. This percentage is called your contribution percentage. Say, your gross income is $4,000 and you want to contribute $400 of your income into your 401(k) account, you will have to indicate that you are contributing 10% of your income. You will not be able to claim that portion as your employment income for that year. As long as the money remains your fund, you do not have to pay any taxes for this investment.
For the year 2010, the maximum contribution limit to a 401(k) account is $16,500 and if you are 50 years or more, you can give an additional contribution of $5,500. However, the plan and the percentage of your income you are allowed to deposit in the 401(k) account will vary from one company to another. You need to check the details of the plan with your company and check which mutual funds are approved by your employer.

IRA: You can start IRA or Individual Retirement Account on your own, to save for your retirement. You can annually deposit a part of your employment income. Until you withdraw funds from the account you don’t need to pay any taxes. IRA contributions will also lower your taxable income. How much tax benefit you will get will depend upon your income and the type of IRA you choose. You need to consult with a professional financial planner to choose the right type of IRA account for you. IRA offers you the opportunity of tax-rate optimization. For the year 2010, the maximum contribution limit is $5,000 and if you are 50 years or more, the limit is $6,000.
You need to get a detailed information about the two government sponsored investment accounts and decide which should be proper for your retirement planning. You should consult a financial advisor to get more details of the accounts.