Over 33% of Americans still don’t have a retirement account set up.
With stocks down throughout January, Stock Market investors aren’t feeling too happy about their returns, but this might just be high time to introduce yourself to the world of investing and possibly even begin working on your retirement savings account.
A survey showed that well over 35% of Americans have yet to apply for a retirement account, and the longer they all wait, the more they miss out on the most valuable factor in the investing equation; time.
The sooner you start, the smaller your losses will be, and you’ll likely be able to retire on time, without any significant delays.
The main reason people shy away from these types of accounts is simply that they don’t understand them, or their employer just didn’t bother with providing them with a retirement savings plan, which should be a red flag from the moment you join the company.
Starting a traditional IRA account will significantly lower your taxable income for the next couple of years, but just like mentioned earlier, the withdrawals you’ll be making later on in your retirement will be worth it.
Contrary to that, a Roth IRA allows you to contribute previously taxed earnings, allowing for completely tax-free withdrawals in the future when you finally manage to retire.
At the moment, the maximum amount you can set aside into either of these accounts is $6000, or $7000 if you’re over 50 years old.
401(k) accounts are practically free money
If you’ve been given access to a 401(k) through your employer, though, you’ll be able to save up so much more, as these accounts’ yearly contribution limits are sitting at around $21k or $27k for those aged 50 and up.
The main reason why 401(k) accounts are just that much more favorable, is that most employers offer to contribute a small bonus for you, every time you contribute towards your account, up to a certain annual rate determined by your contract.
With this „free money” practically at your disposal, you should always look for any chance to seize it, and only then look into other options like a standard or a Roth IRA account.
Once you know what kind of account best suits your needs, the next step is picking out the best potential investments to help grow your money.
Invest in Your Retirement Now for Maximum Benefits Later
While stocks usually carry the best growth potential, they’re also insanely volatile, so unless your retirement is at least 10 years away, you shouldn’t really be exposing yourself to risky assets like that.
Unfortunately, with the added uncertainty of when you’ll retire, they’re a necessary evil, so a portion of your portfolio will be dedicated to them, in order to have a certain amount of potential growth in it to last you should you have to power through 20-non-working years before you retire.
The most important part of this whole process for you is to start early, as the longer you wait, the smaller your gains will be at the end.
In the end, by starting now, you’ll not only secure a steady income source for your retirement years but also save thousands of dollars in taxes and fees in the future.
so don’t wait anymore; look into the best retirement account options available and start your own savings plan today. It might just be the wisest decision you make in regards to your financial future.