|dc.description.abstract||Economic events in the past few years such as inflation,
problems with the social security ·system, and a high rate of
business failures have demonstrated that planning for
retirement as soon as possible is the best way to ensure a
healthy retirement. Today, Americans are living ten to twenty
years beyond their retirement age and with medical technology,
many beyond the age of ninety (See Appendix I). This is
equivalent to about one third of one's life spent in
retirement. (2, p. 1)
Employees may be entitled to retirement income from a
retirement plan established by their employer, and will
probably receive some income from Social Security. This
income, although important for providing a base during the
retirement years, in most cases, is insufficient and leaves
much to be desired. According to the Social Security
Administration, "Among retirees over sixty-five who earn more
than $20,000, Social Security and pension benefits together
account for only thirty-five percent of income. (3, p. 48)"
(See Appendix II). Though inflation has been low over the
past few years, over time, its effects can make the income
received from these programs unable to cover one's basic
living expenses. Most retirement plans, as a common rule of
thumb, state that retirement income should be seventy-five to
eighty percent of current income, adjusted for inflation. (11, p. 91) Most individuals want to enjoy retirement to the
fullest and therefore, should begin planning early to provide
for medical costs or financial emergencies (See Appendix III).
IRA's and Keogh plans can help form this important part
of retirement planning in addition to any retirement benefits
from employers and Social Security.
The IRA and Keogh are two unique programs created by
Congress that permit eligible individuals to accumulate funds
for retirement, instead of completely relying on employer- or
government- sponsored retirement programs.
A positive factor in investing in IRA's and Keogh's is
that not only may the contributions to these programs be tax
deductible, but the tax on one's annual earnings is deferred
until one begins to receive distributions from the programs.
Because of compound interest and this tax-deferred nature,
over a period of time, the funds have a chance to