age 591/2 , all of her subsequent withdrawals will be tax free. Considering her youth, she may be able to accumulate a tremendous amount of tax-free funds for her retirement.”
Portfolio building. It’s never too early to start planning and investing for retirement. Beyond building a source of tax-deferred post-employment funds from Social Security, company-sponsored plans, or IRAs, construct a high-quality portfolio of stocks-individually and collectively. Focus on the long-term, and select equities from the New Economy-Intel (Nasdaq: INTC) and Cisco (Nasdaq: CSCO), for example-as well as from the Old Economy-General Electric (NYSE: GE) and Home Depot (NYSE: HD) are two possibilities-that are market leaders with staying power.
Many investors have used their 401(k) experience to learn about investing and then gone on to develop investment clubs with family members, friends, and colleagues. McCowin’s advice to young investors: “No one is going to provide us with the kinds of pensions our parents received. You have to do it on your own, so don’t wait to get started.” Be
What to look for in tax-deferred vehicles
Want to keep Uncle Sam from taking a big tax-bite out of your investments? Tax-deferred vehicles may be the answer. Here are some taxing matters to consider in order to shelter your wealth:
Social Security is a good way to supplement your retirement income. Currently, the average retiree collects $10,000 per year and while that’s hardly enough to cover your expenses in retirement, every little bit counts.
Company-sponsored retirement plans offer tax-deductible contributions and the investments grow tax-deferred. For those with 401(k) plans and 403(b) plans, contributions are made before taxes, thereby reducing your annual tax bill.
IRAs give investors more options than ever before. Depending on your financial situation and the investment vehicle, contributions are tax-deductible, while in other vehicles they are not. In a Roth IRA, for example, contributions are non-deductible, but withdrawals are tax free after age 59 1/2.