Even if you participate in a 401(k) plan, you can probably also contribute to a traditional IRA. Your earnings have the potential to grow tax-deferred and your contributions may be tax deductible, depending on your income level. In 2012, you can put in up to $5,000 to a traditional IRA, or $6,000 if you're 50 or older. (If you meet certain income guidelines, you might be eligible to contribute to a Roth IRA, which offers tax-free earnings, provided you don't start taking withdrawals until you're 59-1/2 and you've had your account at least five years.)
Finally, if you've "maxed out" on both your 401(k) and your IRA, you may want to consider a fixed annuity. Your earnings grow tax-deferred, contribution limits are high, and you can structure your annuity to provide you with an income stream you can't outlive.
The more years in which you invest in tax-deferred vehicles, the better. So start putting the power of tax deferral to work soon.
*This hypothetical example is for illustrative purposes only and does not represent a specific investment or investment strategy.
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Edward Jones Financial Adviser Michael Quinn submitted this column. Quinn's Edward Jones office is at 25 Railroad Square, Suite 201, Haverhill. He can be reached at 978-372-8453.