There are many ways to save for retirement, but the most important thing to remember is it’s never too early or late to start. Even if you only have a few dollars a month to put aside, getting into the habit of saving gives you a better chance of succeeding at it than not saving at all.
Get in your employer’s plan
If your employer offers a 401(k) or 457, it’s easy to make contributions directly from your paycheck, before you even get it. Many employers will also match employee contributions, so by not participating you could be turning down free money. If you have a retirement plan with your employer, work with a financial advisor to make smart decisions with your investments considering your age, risk tolerance and income. Your HR department can help you do the work, but isn’t in a position to advise you on the best ways to invest your funds.
Get an IRA
Another great choice for retirement savings is an Individual Retirement Account (IRA). Both Traditional and Roth IRAs are funded with after-tax dollars. With a Traditional IRA, contributions may be tax-deductible - and you’re only taxed on the deductible contributions you’ve made and earnings you’ve received over time when you make withdrawals. A Roth IRA allows you tax-free withdrawals if you meet certain IRS rules.
A Simplified Employee Pension (SEP) IRA is a unique option that you may have available to you if you are self-employed or work for a small business. With a SEP, your employer makes tax-deductible contributions to the account; employees do not make direct contributions.
Consider lesser known retirement options
No matter whether you choose a specialized retirement account or choose another method of saving, like a Share Term Certificate ladder, it’s important to start saving whenever and however much you can.
The advice provided is for informational purposes only. Contact your financial advisor for additional guidance.