Alternate Retirement Options

The main options to save for retirement at this time are through a 401(k) of up to $17,000 a year or an IRA of up to $5,000. A recent article from CNN Money brings up some excellent suggestions for retirement savings.

If married, ensure your spouse is also making out a traditional or Roth IRA. If you own your own business, or any of your income counts as self-employment income, you may be able to contribute up to $49,000 to a SEP-IRA or solo 401(k) plan.

Other alternatives include tax-efficient investments, in other words, investing in financial tools that minimize the ongoing taxable distributions and generate most of their return in the form of unrealized capital gains.

If you hold on to investments for more then you will be taxed at the long-term capital gains rate of 15% instead of the 35% tax rate on short-term capital gains.
Some potential investments include: tax-managed mutual funds, index funds, and ETFs (exchange-traded funds.).

A helpful tool to asses how much of a fund will be taxed is to check the “tax-cost ratio”. Go to Morningstar and enter the ticker symbol in the quote box and then go to the “Tax” tab. The smaller the tax-cost ratio, the better. Take a deeper look, do some research and try to take advantage of these alternatives to make the most of your retirement savings.