Practical Ideas to Achieve Financial Freedom – Part 5

December 30th, 2007 | Stacey | Passive Income, Financial Independence, Financial Freedom Opportunities, Financial Freedom

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In our series discussing practical ideas to achieve financial freedom, we introduced basic savings and passive income vehicles in our last entry, ending with 401(k) plans to become financially free during retirement. Today we will discuss additional ways to save for retirement and attain the financial independence you want in your later years.

Another way to save for retirement is a 403(b) tax sheltered annuity (TSA), which is similar to a 401(k) plan for nonprofit organizations such as social service agencies, hospitals or schools. You can put a portion of your pay into the annuity on a pretax basis and it grows free from being taxed.

You can also make individual retirement arrangements (IRA) to save for retirement where your earnings will grow tax deferred until you start to make withdrawals. If you are 50 or over, you can make catch up contributions to your IRA for years you did not get to fully invest. You can choose a variety of investment options for your IRA, including mutual funds, stocks, bonds and CDs as long as the money is in an IRA-approved account and officially designated as an IRA.

If you are self-employed, a Keogh Plan allows you to contribute up to 25 percent of your net income on a tax-deferred basis. Because these plans are a bit more difficult to set up than other retirement plans, get tax advice before you get started.

Tomorrow we will discuss more dynamic or risky ways to use your money to achieve financial freedom in your future.