If 2020 taught us anything, it’s that we need to have a plan for our futures. Retirement plans are a great way to start saving specifically for your future. When looking into different plans there are a few things to think about. First, your income, some retirement plans such as a Roth IRA (Individual Retirement Account), have a yearly maximum that can be contributed based off your income. You want to start this plan as early as possible to make sure you can contribute as much as possible. To those who have just landed your first job, this is the perfect time to think about your retirement, when you are likely able to contribute the maximum amount. The second thing you want to think about is the dreaded taxes. In the case of retirement, you have some control over your taxes. You can decide whether you want to be taxed when you take your money out when in retirement or when you put your money in before you retire. In most cases its smart to diversify and have some plans that are taxed before and some that are taxed after. Third, your age, some plans have an age limit that you’ll want to keep in mind. Again, the earlier you start thinking and planning for your retirement, the better. But, if you are late to the game, don’t worry! There is likely still time for you to plan, an IRA allows contributions from those over the age of 50 (dol.gov).
Want to research more on IRAs and see if a Traditional or Roth would suit you best? Click here for the SCCU Retirement Central Tool. Research options, get answers to frequently asked questions, and even contribute online!
*Consult a tax advisor for additional information.