For certain U.S. residents who had been expecting to retire from a federal job, and had anticipated the seemingly inevitable need to live on a fixed income, news was good in late 1986. That's when the government announced plans for the launch of the Federal Employee Retirement System (FERS). The provisions within the FERS were to become effective on January 1, 1987. Those provisions would cover all federal employees hired after December 31, 1983.



Certainly, not every retiree in the U.S. has worked for the federal government. For that reason, retired U.S. citizens, citizens who are on a fixed income, have to prepare for that eventuality by making smart investments. They need to secure a future income that will allow them to live comfortably, free from undue financial concerns.

A U.S. worker who makes a fixed investment can generally hope for a more secure income after he or she retires. Of course, that fixed investment should be a safe investment. Fortunately, the financial institutions in the United States have created a number of ways by which employees can pay into a safe and secure investment.

Self-employed workers can pay into a SEP-IRA. When a small business owner contributes to a SEP-IRA, that contribution is 100% tax deductible. If someone who has invested in SEP-IRA withdrawals money from that account after he or she becomes 59 and one-half years old, then his or her withdrawal is taxed like regular income. If the withdrawal is made before the account owner reaches that "magic" age, then the account holder must pay a 10% IRS penalty, in addition to the regular tax.

Self-employed workers have welcomed the opportunity to pay into a SEP-IRA. They have felt comfortable with the high level of the maximum allowed payment. A small business owner who wants to invest in a SEP-IRA can contribute as much as $45,000.00.

When someone makes such a large contribution to a SEP-IRA, then he or she hopes that that investment becomes a high yield investment. Yet not every American worker can pay for a high yield investment. Young single workers seldom have money to spend on a high yielding, long term investment. They tend to invest in low risk, short term securities.

The mutual fund market offers low risk, short term securities. The worker who puts money into a mutual fund market fund has found a safe place to invest his or her limited number of dollars. By the same token, he or she has secured easy access to that same money in the future.

Because the U.S. system encourages competition, there is competition for the dollars of the young investor. The United States has more than one money market fund. An online search for such funds brings up names such as "Scudder" and "American Funds".

Some naturalized U.S. citizens have a different sort of secured investment. They own land or real estate overseas. They need to weigh the benefits of cashing in on that investment, and bringing the cash into the United States.