I hate the word ‘retirement’. Yes, okay, as one gets older we are less able/effective to do most work but do we have to ‘retire’? In some cases, yes, maybe that is the best choice for the health & safety of everyone involved,  but not always, right?

Anyway, most accessible savings plans out there are designed to penalize you if you take out the money before you ‘retire’. Depending on the plan that can be as early as 59 1/2 or after 70 years old.  And then, some savings plans force you to take money out after you reach a certain age.

Generally, I have no beef with this concept. It is wise to save and if that means tying yourself to the mast so you don’t jump in after the sirens then so be it. It is also interesting that each savings plan has limits on how much you can contribute based on your income. I think this is a governmental, state administration issue. i.e. a way to make the plans have the appearance of fairness. A noble intention but in reality not sure if it does that…who knows, maybe it does.

Anyway, on the tactical level (i.e. you’ve already considered the bigger picture), if you’re thinking about how to defer tax you can look to an IRA if your income is lower and a 401K if you are an employee whose employer participates or a business owner. There are other plans but these are the most available. 

If you’re a small business owner that makes too much to contribute to an IRA, you can sign up for a ‘retirement’ savings plan for your small business. I know there are a bunch of companies that will administer these for you but I’ve found that Merrill Edge does a decent job.

Once signed up, you contribute a portion of your income into a tax deferred retirement plan just as if you were an employee in a company. As an added benefit, some ‘retirement’ savings administrators offer a Roth 401K option. This allows you to either defer taxes  while reducing your tax liability in the current year (Traditional 401K) or pay taxes this year while eliminating taxes when you take the money out at ‘retirement’ (Roth 401K).

Talk with your financial advisor, accountant, lawyer, spouse, etc. about things financial. Good luck.