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Social Security
After paying into the Social Security system their entire working life, retirees finally get to collect payments. Social Security is the foundation of your retirement income that the rest of your savings and investments should build upon. Take steps to maximize your benefit by making sure you have paid in for an appropriate number of years, and sign up at the best age for you.
Medicare
Significant health care expenses could easily consume a significant part of your retirement savings, but Medicare largely makes sure that doesn't happen. You can sign up beginning three months before your 65th birthday, and it's a good idea to do so then to avoid higher premiums if you sign up later. If you retire before age 65, you will need an alternate plan to obtain and pay for health insurance.
401(k)
Workers who contribute to a 401(k) plan often get valuable employer contributions, tax breaks and the opportunity to have the money withheld from their paychecks before they get a chance to spend it. A worker in the 25 percent tax bracket who contributes the maximum amount of $18,000 in 2015 will save $4,500 on his federal income tax bill. Workers age 50 or older can make catch-up contributions of up to $6,000 in 2015, which will save them even more in taxes.
Roth 401(k)
A Roth 401(k) has the same contribution limits as a traditional 401(k), but the tax treatment is different. Roth IRA contributions are made with after-tax dollars, but withdrawals in retirement from accounts at least five years old will be tax-free, meaning you won't have to pay tax on the earnings you accrue in the account.
IRA
Individual retirement accounts offer similar tax treatments to 401(k)s, but the contribution limits are lower. The IRA contribution limit is $5,500 in 2015, and savers age 50 and older can contribute an additional $1,000 as a catch-up contribution. However, many people build a larger IRA balance by rolling over their 401(k) balance to an IRA each time they change jobs. IRA contributions aren't due until April 15, while 401(k) contributions typically must be made by the end of the calendar year.
Roth IRA
A Roth IRA allows you to prepay tax on your retirement savings, and then you will not owe tax on withdrawals in retirement. Roth IRAs are especially beneficial to people who are young and in low tax brackets, especially if they suspect they will be in a higher tax bracket in retirement. Investors can also convert traditional IRA assets to a Roth if they are willing to pay tax on the amount converted.
Savings account
An emergency fund that will cover unexpected expenses such as medical bills or home and car repairs is a necessity. Maintaining a savings account allows you to avoid triggering taxes and penalties by raiding retirement and investment accounts early or, even worse, taking on debt to cope with emergencies.
Paid-off home
Owning a home that is paid off can help you enormously in retirement. No longer needing to make rent or mortgage payments gives you more money to spend on other things. And if you ever need extra cash in retirement, owning a home gives you options to downsize and pocket the extra cash or take on a reverse mortgage.
Part-time job
Continuing to work part-time in the early part of your retirement gives you opportunities to get out of the house, meet new people and, of course, earn a little cash. Having money coming in allows you to delay or take smaller withdrawals from your retirement nest egg, which gives your savings more time to grow.
Pension
If you're fortunate enough to get a traditional pension in retirement, it can contribute significantly to your retirement security. Pensions provide a steady stream of payments that will last the rest of your life, no matter how long you live, which reduces your risk of spending down savings too quickly.
Culled from US News
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