- Social Security benefits may not be enough to fund a comfortable life once you retire. A growing number of people are seeking additional retirement security through investing, according to Bankrate.com and ABC News. Though no investment is guaranteed to gain in value, Forbes reports that the benefits of investing for retirement often outweigh the risks.
- Potential tax benefits are one reason to consider investing in an Individual Retirement Account, according to ABC News. A traditional IRA can increase in value over time. Within certain limits, deposits to a traditional IRA provide immediate tax deductions. However, you'll have to pay taxes on any gains when you withdraw money in retirement or for another reason, such as purchasing a home.
A Roth IRA is funded with post-tax dollars, but you won't pay income taxes on the gains when you withdraw the money in retirement. - Your workplace may offer a retirement savings plan called a 401k. Typically, you contribute a certain percentage of your pre-tax paycheck dollars, and your employer may match part or all of your contributions.
- One of the most common mistakes investors make in investment planning for retirement is reducing potential yields by paying load fees, according to Bankrate.com. Even 1 or 2 percent in fees can slash your gains. You can avoid this loss by purchasing appropriate mutual funds directly from the issuing company instead of through a stockbroker.
When selecting retirement investments, consider exchange-traded funds, according to Forbes. Such funds are a collection of stocks in a specific industry, says Alan Haft, president and founder of Fifth Avenue Financial. Such funds can reduce load fees as well as the risks that can imperil retirement investments, according to Haft's interview with Forbes. - It is never too soon to start investing for retirement, according to the book "Smart Women Finish Rich" by David Bach. However, even if you are close to retirement you can still invest. Just avoid making stocks the entirety of your retirement investment portfolio, according to Consumer Reports.