The sooner you start saving, the more you can save for your retirement. Gone are those days when you can rely on the pension plan. Even you can’t depend fully on the Social Security benefit to secure your post-retirement days. You need to save enough money so that you can live a financially secured post-retirement life. However, to grow money, you have to make proper investments. There are some popular investments to save money for retirement like IRAs, SEPs, 401(k)s, 403(b)s and more. But which retirement plan is best for you? To get the answer, you need to ask some important questions to yourself.
Here you go:

1. Tax now or tax later? When do you want to pay?

Yes, you have to decide the time you want to pay taxes when it comes to your retirement savings.
Remember, there are two types of IRAs. 1. Traditional IRA 2. Roth IRA
and, the differences between the IRAs are interesting.
Here you go:

1. Traditional IRA

If you choose a traditional IRA, you can qualify for a tax deduction in the amount of your total contribution. But, when you will withdraw money in your retirement, it will be taxable as ordinary income.

2. Roth IRA

If you choose Roth IRA, your contribution is not tax deductible. But, when you will withdraw money in your retirement, you will not be required to pay taxes on your withdrawals.

So, before choosing the traditional IRAs or Roth IRAs, you have to ask yourself when you would like to pay Uncle Sam. Right now or in your retirement?

2. When do you want the access to your retirement savings?

The goal of saving money for retirement is to have the money available in your retirement. But, emergencies are uncertain; you might need to withdraw money early. But, the IRS will charge you a 10% early withdrawal penalty on the non-qualified distribution from a 401(k) or IRA.

But, an exception is there. You can take out money to fund the higher studies from the traditional IRA. You will not be charged for early withdrawals. On the other hand, non qualified withdrawals from Roth IRA is also penalty fee as Roth IRAs are funded with money on which you've already paid tax on.

So, considering the future financial circumstances, you may need to opt for the right one.

3. Are you looking for the money right after the retirement?

Some pre tax retirement savings plans like a traditional IRA, 401 (K), and other employer-sponsored retirement plans don’t allow to take out the money before age 70-½. They just can take out a loan from the account, which is not beneficial as they have to repay it to save as much as possible.

But, a Roth IRA has no such criteria. You can take out the savings once you retire. If you don’t want to take out the money until at the age 80 or 90, that’s fine as well.

4. Do you have your own business?

If you are a self employed person, you can include SIMPLE IRA, SEP-IRA, and Solo 401(k) as the contribution limit is higher than Roth IRAs.

5. Are you planning a financially secured future for your heirs?

If you want to leave savings for your next generation, then go for Roth IRAs as the savings will be tax-free. However, your heirs can only take out the money based on their life expectancy. They can’t use the account for further savings.

6. Are you looking for contributing money even after retirement?

If you want to contribute money to your retirement savings account even after your retirement, then you should go for Roth IRAs as they have no required minimum distributions and upper age limit for contributions. You can make a contribution to a Roth IRA as long as you want.

Always remember, choosing the right retirement plan is not easy. It is very important to take the matter seriously and work on it. To make the job easier, you have to ask the above questions to yourself. Once you get the answers, you can get help from a financial advisor to verify whether or not you’re on the right track.