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Navigating Your First Retirement Plan

Written by: Therese (she/her)

2 min read | Published: August 13, 2024

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Entering the workforce marks a significant milestone in your life, and with it comes the responsibility of planning for your future. One of the most important steps you can take is to start thinking about your retirement plan. While retirement might seem like a distant reality, beginning early can set you on a path to financial security. Understanding some of the general terms and different plan options before you dive in will help with these key decisions.

Retirement plans are financial arrangements that allow you to save and invest money for your post-work years. The most common types are:

401(k) or 403(b): Offered by employers, these plans allow employees to save a portion of their paycheck before taxes are taken out.

IRA (Individual Retirement Account): This personal savings plan may offer tax advantages for setting aside money for retirement. There are two types of IRA accounts:

Brokerage: These types of accounts, which let you trade securities like stocks and bonds, can be opened with several major financial institutions. You may be able to open these with lower minimum balance requirements, and they usually provide varying inexpensive investment options.

Key Terms to Know
What to Look For
The Power of Time

The earlier you start saving for retirement, the more you benefit from compound interest. Even small contributions can grow significantly over time. Choosing your first retirement plan is a pivotal decision. By understanding the basics and starting early, you can take control of your financial future. Remember, it’s not just about saving, it’s about investing in the life you want to lead when you’re no longer working. By creating a wise retirement plan now, you will be able to secure the financial future of your dreams.

Sources:

https://www.investopedia.com/retirement/roth-vs-traditional-ira-which-is-right-for-you/#:~:text=The%20key%20difference%20between%20Roth,get%20tax%2Dfree%20withdrawals%20later.

https://www.principal.com/individuals/build-your-knowledge/investment-product-and-account-terms-know

https://www.nerdwallet.com/article/investing/ira-vs-401k-retirement-accounts

https://www.northwesternmutual.com/life-and-money/compound-interest-101-the-benefits-of-saving-early/

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