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How can I plan for retirement if my employer doesn't offer retirement benefits?

In many cases, your first step should be to open an IRA and contribute as much as you possibly can each year. Because of tax-deferred, compounded earnings, IRAs offer similar long-term growth opportunities as employer-sponsored plans. In addition, you may qualify for tax-deductible contributions or tax-free withdrawals, depending on whether you invest in a regular IRA or a Roth IRA.

Another tax-advantaged option to consider is annuities. Generally purchased with a life insurance company, a typical annuity features tax-deferred growth and provides either fixed or variable payments beginning at some future time (usually retirement). Depending on the type of annuity, you may have several options in how you ultimately take distributions. Annuities are long-term planning vehicles ideally suited to retirement planning. Note that withdrawals from annuities prior to age 59 1/2 are subject to a 10% tax penalty and withdrawals during the first several years are subject to surrender charges. Earnings, when withdrawn, are subject to ordinary income taxes.

Finally, don't forget about traditional investments (e.g., stocks, bonds, growth investments). Most of these vehicles are taxable, but they can still help you accumulate a significant amount over the long term. Keep in mind that these investments are subject to market fluctuations and may lose value. The specific types of investments you select will depend on your risk tolerance, time horizons, liquidity needs, and goals for retirement. A financial planner can help you construct a portfolio that makes sense for you.

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