Saving for retirement is an important goal for investors to follow, but sheer number of different types of retirement accounts keeps many investors from feeling comfortable getting started with a strategy for their retirement saving. Even though many people end up getting intimidated by the wide range of available options, smart savers understand that each choice has a potential role to play in an overall saving strategy. Lets take a closer look at several popular types of retirement accounts to figure out which ones make the most sense for you.

The big battle between IRAs and 401(k)s
One of the most controversial issues in retirement saving is whether to use an employer-sponsored retirement plan like a 401(k) or a self-managed retirement account like an IRA. Both accounts have their advantages and disadvantages, but in many cases, using both together can give you the best results.

401(k) plan accounts have the benefit of offering an easy way to divert money from your paycheck directly toward retirement savings, with tax benefits that allow you to use pre-tax money. In addition, many employers offer incentives to workers to participate in 401(k) plans, including profit-sharing contributions and employer matching of worker contributions. In essence, you might be able to get free money from your employer if you participate in your 401(k) plan, and contributing enough to take full advantage of any employer match is usually a smart move.

At the same time, though, some 401(k) plan participants have to deal with high expenses and a limited range of investment options that doesnt necessarily meet all of their needs. Because of this, an IRA can look a lot more attractive, as IRA investors can typically enjoy a full range of investment options that go beyond the typical mutual fund offerings in 401(k)s. IRAs let you invest in anything from individual stocks to exchange-traded funds, mutual funds, and even more exotic investments like real estate or precious metals under the right circumstances. By allowing you to choose your investments from the full range of those permitted by law, an IRA lets you make your investing as efficient as possible.

Both 401(k)s and IRAs offer generous amounts of savings. 401(k) maximum contributions set at $18,000 this year for those under age 50 and $24,000 for those 50 or older. IRAs have lower limits of $5,500 for those under 50 and $6,500 for those 50 or older, but even those amounts are generally enough to give you the flexibility to use either or both types of accounts to meet your needs.

Roth or regular?
The other major question with retirement accounts is whether to choose a traditional or Roth IRA or 401(k). Traditional retirement accounts use pre-tax money and grow on a tax-deferred basis until you withdraw the money in retirement, at which time the withdrawal gets included in your taxable income. Roth accounts, on the other hand, offer no upfront deduction, using post-tax money. Yet they also dont create a tax bill in retirement, as the account essentially grows tax-free as long as you use the money in an eligible manner.

Whether to use a Roth or regular retirement account depends on highly personalized factors, but the biggest has to do with your current tax bracket. If youre in a high tax bracket now, then using pre-tax money has a definite appeal, and its more likely that you can reduce your tax rate by the time you retire and therefore make better use of a pre-tax traditional retirement account. If youre in a low bracket now, however, then a Roth retirement account makes more sense, as you can potentially avoid what might become a higher tax bracket by the time you retire.

Dont forget regular accounts for retirement saving
One thing that many savers never realize is that you dont have to use a special retirement account to save for your golden years. A regular taxable account doesnt give you all the tax advantages of IRAs and 401(k)s, but it also ensures that you can get access to your money at any time for any reason without any unnecessary complications. Having savings in an ordinary brokerage or fund account can help you save both for retirement and for nearer-term needs like a down payment on a home more effectively.

Overall, different types of retirement accounts can be extremely helpful in allowing you to prepare for your post-career life. By using the different benefits that each type of retirement account offers, you can take advantage of the incentives that the government has created to help you save for retirement and ensure your financial security for the rest of your life.



Dont count on the so-called great wealth transfer to save your retirement.

It turns out inheritances barely move the needle when it comes to retirement readiness, according to new research from the Center for Retirement Research at Boston College. Even factoring in inheritances, 51.6 percent of households are at risk of falling short on savings--ie, they wont have enough to sustain their pre-retirement standard of living in retirement. If those inheritances werent in play, 52.4 percent of households would be at risk.

In other words: receiving an inheritance has been a retirement-saver for less than 1 percent of households. Dont count on inheriting your way out of this problem, said Alicia Munnell, the centers director.

Researchers also looked ahead--after all, the greatest generation is expected to transfer $12 trillion to their heirs over coming years, and baby boomers in turn will pass on about $30 trillion, according to a 2013 Accenture report. Assuming twice as many households inherit, the rate of those with inadequate retirement savings would drop from 51.6 to 50.7 percent, the Center for Retirement Research found.

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If you add it all up, theyre going to get lots of money, said Munnell. So why does it have such a small impact? The people who get [an inheritance] werent at risk in the first place, she said. Inheritances tend to increase by income group, with high earners being both more likely to report receiving an inheritance and more likely to inherit a high-value asset.

Its always dangerous to assume youre going to have a pile of money dropped on you, she said. For the more at-risk lower- and middle-income workers, that assumption isnt panning out.



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PIERRE | State legislators and trustees for the South Dakota Retirement System violated state laws regarding a proposed special salary increase for the retirement system administrator.

Administrator Rob Wylie sent an email Thursday to members of the Legislature's Retirement Laws Committee acknowledging the problems.

"I owe each and every one of you an apology," Wylie wrote.

He confirmed to a newspaper reporter on Friday that he wrote and sent the email.

The Legislature approved a 2 percent raise for state government employees effective July 1. That took Wylie's salary to $129,639 as of July 1.

The violations occurred when the trustees sought to grant an additional 2 percent to Wylie.

State law directs that the trustees must recommend any additional compensation for the administrator before May 1. That deadline wasn't met.

The trustees met in executive session at the start of their June 4 meeting, then returned to public session. On a motion by state Supreme Court Justice Steve Zinter, who serves on the board, the trustees unanimously approved recommending the additional 2 percent.

State law further requires that the additional compensation can't take effect without approval from the Legislature's Retirement Laws Committee. The two bodies held a joint meeting June 2 in Sioux Falls.

The administrator's compensation was listed as an executive session item on the trustees' official agenda for the June 2 meeting. But the compensation issue wasn't on the legislative official agenda.

Only six of the 10 legislators on the committee attended the June 2 meeting. Although the compensation issue wasn't on the their agenda, they proceeded to a vote on it. That violated state requirements for conduct of a public meeting.

The tally was 5-1, short of the six ayes necessary.

The nay came from Sen. Bernie Hunhoff, D-Yankton. Hunhoff said he couldn't support extra pay for an administrator because of the low pay for many public employees in South Dakota.

The committee took a break. Its chairman, Sen. Bruce Rampelberg, R-Rapid City, later told the trustees and legislators that the legislators could reconsider the matter at a later time.



Floyd Mayweather Jr. looks up to the sky after retaining his welterweight title in a unanimous decision. It was his final bout. Photo: AP