Get the scoop on why you should start thinking about your retirement now.
IRA? 401(k)? What’s the difference?
- IRAs and 401Ks are both tax-advantaged retirement accounts that could help you save for retirement. Did you know: You can have both types of accounts.
- While you can have both types of accounts simultaneously, there are annual limits to how much you can put away.
- A 401(k) is a qualified employer-provided retirement plan.
- An IRA is an individual retirement account that anyone can open up through a brokerage or financial institution.
What’s a Roth IRA?
- A Roth is a type of IRA.
- As opposed to a traditional IRA, which is funded with pretax dollars, it’s funded with after-tax dollars.
- There are no required distributions with a Roth. If you’ve followed all the rules, you can take out cash without paying taxes.
How much do you need to retire?
- Some organizations including AARP recommend saving between $1.2 and $1.5 million.
- That could support a 30-year retirement.
- Health care and housing are the two largest costs to think about.
- Compound interest can have a huge impact on long-term retirement savings, which is why it’s important to start saving early and contributing regularly.
Contribution limit changes
- The Internal Revenue Service (IRS) increased contribution limits on Individual Retirement Accounts (IRAs) and 401(k)s.
- The cost of living adjustment is the first contribution limit increase in six years.
- Annual contribution limits for IRAs will increase to $6,000 from $5,500.
- You can contribute up to $19,000 in a 401(k).
Quote of the Week
“All life is an experiment. The more experiments you make the better.”—Ralph Waldo Emerson, American essayist, and philosopher.
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