Written by: Elise Keesler
Saving for retirement. Something that many of us probably do not consistently think about which we should. Another reason is when we think about retirement, it scares us because that means we are getting “old” right? Well, there is no need to be afraid if we figure out a plan BEFORE you get to retirement age. One way is to nvest 15% of your income into tax advantaged accounts such as a 401K or Roth IRA. Now let’s explain what those are.
Some things about 401k’s...
A Roth IRA is an individual retirement account under United States law that is generally not taxed upon distribution, provided certain conditions are met. This is also a retirement savings account that lets you pay taxes on the money you put into it right away which means the growth in your account and any withdrawals you make after age 59½ are free of tax.
(^^Here is a good way to look at the difference between these two. You can go through your job to create a way to good saving or make one on your own! )
More than 80 million workers actively participate in 401ks. There are more than a half million different company plans in place, according to a January 2019 report by the American Benefits Council. In total, $5.7 trillion in assets are held within 401ks in the U.S.
IRA contributions must be made by April 15th which is the standard tax filing date. If you are above the limits, you can still add to the post-tax income to a traditional IRA and take advantage of its tax-free growth.
Some final thoughts, take the time to create one of these accounts whether that be now or in a few years. It will be really valuable in the long run to do this. Thank you for reading!
https://www.daveramsey.com/blog/how-to-save-for-retirement
https://www.investopedia.com/terms/t/traditionalira.asp
Elise! Thanks so much for writing this. Like you said, retirement is not always something that we think about. Due to that, I've always felt like I didn't know much about it. Your blog was very informational. In addition, I didn't know that after 59 and a half years old the withdrawals you make are tax-free. Do you get penalized for taking money out before then?
ReplyDeleteYes, I believe it is 10% for the fee of taking money out before you are 59 1/2 years old.
DeleteKnowing the best options to start saving for our retirement is something that I had never thought about. Must be my fear of getting old, or the thought that I have to save enough money to help me survive those last years that I can't work. Saving for retirement seems like something that one might not give much thought to and that, as you explained, it's pretty easy to do from a young age. I loved your explanation and how concise the information was!!
ReplyDeleteOne comment unrelated to the actual writing is that all of your images are hard to read. But overall I have a better idea of how money grows in these accounts. Based on what you provided a 401k sounds better more suitable for me so I will have to do more research in the future.
ReplyDeleteIm sorry it was difficult to read! Im glad you have a better understand as I do now having created this. I would say 401k is better too because your employer helps with that.
DeleteI never though about retirement so learning about 401k and roth IRA was very helpful and informative. Also learning the differences between the 2 is helpful in figuring out which option is best.
ReplyDeleteYes learning the difference is HELPFUL.
DeleteBudegting is an important aspect when it comes to saving for retirement. In the future, or even now, when we set up these accounts, it is important we know how to go about the saving portion. How do we want to split our paychecks up. Do we want to go the 50/30/20 route. Maybe something a little bit different for yourself. Do you want to sit on money or invest it all. There are a lot of ways to go about it, but it is important that we reflect on these topics and make ourselves a plan.
ReplyDeleteThis blog is very helpful when deciding whether to do a 401(k) or an IRA when making a retirement plan. I think your visuals were very helpful for understanding the differences between these two things, but I do wish you'd reviewed/summarized the images to us as well. I got kind of confused about the first visual, though I do believe I got the general idea of it, I'm not sure what a "DC" or a plan sponsor is, and I think going over that may have been even more helpful to the reader. Despite that, though, I think you did a very nice job explaining the differences. If I had one question I could ask, it would be: Do you think a 401(k) and a IRA would be better than the other depending on the person's situation? I know 401(k)s seem so beneficial because your employer may also invest in your retirement plan, but when would it be more beneficial to use an IRA?
ReplyDeleteSaving for retirement is something that students should start thinking about long before they retire. This allows there money to grow the fastest and for them to earn the greatest amount of money! I know my workplace offers a 401k, but it requires you to be 21 for them to make any contributions. However, those several years between now and then could have caused great increases in wealth!
ReplyDeleteI think it's important that, from the minute you begin consistently making money, you start setting some aside in a retirement account. There's also things you can do with that retirement money, such as investing it. For example, in my Roth IRA, I can invest the money in there and the money I make in that account is not taxed under capital gains, unlike regular investing.
ReplyDeleteThis is such an important article because at our young age, a lot of kids forget that saving for retirement is something that you need to start early. If you don't then that will catch up with you when you actually need the money. I loved your article!
ReplyDeleteWe don't get much education about these kinds of topics in school which is disappointing as this is important information for the future. Most people don't really start thinking about the details of their retirement until later in their life. By that time, it would be difficult to build up the funds for a comfortable retirement. Through social media platforms, there are most people educating young kids on these subjects.
ReplyDeleteI like the fact that the pictures you included were meant to be analyzed before continuing the reading, thus making your blog and the graphics within it more interactive. Adding onto your final thoughts at the end, why will it be very valuable to you in the long run? Do you personally think you should start now or a few years later? Based on reading some other comments, it was nice to hear about this subject because--I agree--a lot of schools don't teach in depth about financial investment and growth.
ReplyDeleteI loved the visuals you added, they made it easier to understand. Like a lot of the other comments I see, I haven't put any thought into this, but it sounds like if I start soon I will have a great future! Thank you!
ReplyDeleteThis was a very interesting article, as I, much like many of the people around me, are scared to start thinking about retirement already. This gave some really good foundational information on both IRAs and 401K’s, but I do still have questions. This article made me wonder, why would you select one over the other? What benefits does one have over another? What actually is a 401K, as that felt unclear? Your article has a very nice format and I am very interested in the topic, making this a very nice read.
ReplyDeleteI would personally say 401k just because your employer will match what you put in each year.
DeleteThis post was very informative to read and gave good information about saving money for retirement. I do agree that many people don't think about retirement before it's too late. Although it is far away, starting to save now will help you out in the long run. Both a 401k and Roth IRA are good options, but are there any benefits from one or another? People should start saving and paying more attention to their own future and should start saving sooner rather than later in the case of retirement.
ReplyDeleteGreat job!! You did a great job of explaining a concept that can be foreign to anyone but especially people of our age. Your information about Roth IRA’s was clear and did a good job at illustrating what it does. However, it would have been very interesting if you talked about things like how to open a custodial Roth IRA, or how Roth’s are more flexible than regular retirement accounts like a 401k or a traditional IRA. You had great images as well and they were very informative and helped me more deeply understand these retirement accounts. Your pictures for the 401k were especially good. Despite this, I wish you would have added some more of your own writing when it came to an explanation of a 401k. Overall this was a great blog and your writing did a great job at helping me better understand saving for retirement.
ReplyDeleteYou did a good job on the piece, but I have one question. Where can I set up a 401k and what bank should I but the money for the 401K in.
ReplyDeleteYou did really good on this blog and there is really good information on here and I don't think we or even adults really think about retirement until more later in their life time.
ReplyDeleteThis topic is something I'm really interested in and even would want to do my own blog post on. You did a really great job on explain and including visuals of the different ways of saving. Overall, your post was super informative and I'm really glad I read your post!
ReplyDeleteThanks for sharing these tips and infographics! This topic is very useful for someone young so they'll be prepared by time old age comes around. I already feel like a geezer so I'll have to look into this haha!
ReplyDeleteI really like how you listed multiple examples of ways to save for retirement, and I agree that it is important to start saving sooner rather than later. But I was wondering, what should the standard age be to start saving for retirement?
ReplyDelete