An Individual Retirement Account (IRA) is a retirement product, which is set up to accumulate tax-deferred savings. IRAs can be established by the individual who opens the account, by a non-working spouse, or for a minor with earned income. IRA assets have the opportunity to grow tax-deferred until the participant makes withdrawals. That means the participant earns income on their principal, income on their income, and income on the income that would otherwise go toward paying taxes.
An annuity is a contract or agreement in which you make payments to an insurance company, which in turn agrees to pay you an income stream or a lump sum amount in the future. Annuities offer a range of features that can be selected based on your individual needs and preferences, giving you flexibility in managing your retirement savings.
All contract guarantees or annuity payout rates for annuity contracts and all guarantees and benefits of insurance policies are backed by the claims-paying ability of the issuing insurance company. They are not backed by Merrill or its affiliates, nor does Merrill or its affiliates make any representatives or guarantees regarding the claims-paying ability of the issuing insurance company.
A 401(k) plan is a qualified retirement plan offered by companies and some non-profit organizations that allows employees to invest a portion of their pretax pay into a retirement account. The contributions and the investment earnings have the potential to grow tax-deferred until withdrawn.
A pension plan is an employee benefit that commits the employer to make regular contributions to a pool of money that is set aside in order to fund payments made to eligible employees after they retire.
Retirement income sources can also include:
- Additional savings and investments
- Income from a business or part-time employment
Strategies aligned with risk tolerance and time horizon.
Investments whose risks and returns are generally not correlated with more traditional investments (i.e., equities, fixed income and cash), which can include managed futures, hedge funds, private equities, income-producing real estate, precious metals and structured products. Alternative investments should be carefully considered based on an investor's investment objectives, risk tolerance and net worth (for some alternative investments, net worth of $5 million or more is required.) Alternative investments are often long-term, illiquid investments that are not easily valued.
Alternative investments are intended for qualified investors only. Alternative investments such as derivates, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should consider your overall financial situation, how much money you have to invest, your need for liquidity, and your tolerance for risk.
Financial products with unique features like annuities and life insurance.