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As a self-employed farrier, enrolling in an employer-sponsored retirement plan isn’t an option. You’re on your own and you want to get serious about saving for retirement by opening a dedicated account, but where do you start? How do you maximize your investment? Is there something better than a standard savings account that offers minimal interest payments? And if you get a late start on retirement savings, can you make up ground somehow?
Not to worry. IRS regulations offer several retirement plan options for the self-employed. And establishing such an account isn’t difficult.
In each of the plans, your contributions are placed into investments such as stocks, bonds, mutual funds or money market accounts in the hope that returns will outpace the interest rates paid on simple savings and checking accounts. You choose the level of risk to your investments (losses are possible) vs. the potential growth of your account.
Brian Kaminski, a financial advisor since 1987 and owner and president of Select Advisor Group Inc., based in Brookfield, Wis., offers insights that can help you choose the right plan.
Traditional or Roth IRA. An Individual Retirement Account (IRA) permits you to invest money each year and the contributions are not counted toward your annual taxed income. The contributions and earnings are tax-deferred until withdrawals begin at age 59½ or later. In…