Scoring a job you love is pretty freakin’ awesome–especially if the benefits are enough to make you want to hug your boss everyday. Paid vacation and health insurance? Yes please! Unlimited sick days? Sign me up! But what if this amazing company doesn’t offer one of the most important benefits–a 401k? While we know this can be frustrating, we also know that it isn’t an excuse to avoid thinking about your retirement. Luckily, there are other retirement options that you can enroll in on your own to start saving for the future. Let’s talk about one of the most common types: Individual Retirement Accounts (a.k.a. IRAs).
If even uttering the word “IRA” makes you feel like you’re entering unknown territory, don’t panic -- we’re here to help you understand the basics. There are two common types of IRAs - Traditional and Roth - and both of these accounts allow you to save (and grow!) money for your retirement while offering a tax benefit for doing so. While the fundamentals of Traditional and Roth IRAs are the same, there are some important differences that you should know about. If you open a Roth IRA, there is no tax break for contributions, but withdrawals of your earnings are tax free in the future. Roth accounts also allow you to withdraw contributions before retirement without having to face any penalties. On the other hand, Traditional IRAs will help you save on taxes in the present, but if you want to withdraw money during your retirement, you are taxed at ordinary income tax rates. Still not fully sure what path to take? No worries, we’ve got you.
At Finhabits, we make it easy to get started. Our platform gives you customized advice based on your profiles and needs, and we’re right by your side every step of the way. Once you’re done creating your account, you’ll be able to save as little as $5 a week. All you need is a little determination to get started and you’ll be on the right path towards building the habit of saving for retirement.
Now that you know how simple saving for the future can be, it’s time to get off the couch (or stay on the couch) and take action! Don’t let procrastination stop you from growing your money–start now and before you know it you’ll be way on your well to building a comfortable nest-egg for retirement.