Making an effort to start saving for retirement is paramount to building yourself a financial safety net for both you and your family’s future. There are a myriad of investing strategies for retirement where you can start immediately putting money away for retirement that will only grow as time goes on, but we’ll focus on three of these strategies.
The first is social security, which is automatically deducted from part of your paychecks and paid into a fund that you will receive checks on when you stop working. Unfortunately, social security is not going to provide you with very much money when you do retire as there is not as much money going into it as there used to be. Therefore, it makes sense to look into other retirement savings plans.
This brings us to the 401k, the first alternative to winging it on social security. A 401k is similar to a savings account, except it has a few special rules, such as not being able to take money out of your 401k once you put it in until you reach about 60 years old, and if you do you’ll pay a fee. Additionally, you can’t put more than $18,500 a year into the account. There are many benefits to a 401k, however – for one, many employer-provided programs will often match your contributions up to a certain percentage, and you don’t need to pay taxes on the income you put into the 401k until you pull it out later. And instead of your money just sitting like it would in a savings account, in the 401k, it is invested so that it grows at a rate faster than a typical savings account would.
Finally, there’s the Roth IRA, which is fairly similar to a 401k (the money you put in is also invested) but different in a few key ways. The first is that Roth IRAs are post-tax deposits – meaning that the money you put in, unlike a typical 401k, is already taxed. This means that rather than paying taxes when you take the sum out when you retire, you instead get to take the lump sum without paying any more taxes on it as you’ve already paid taxes on the money you’ve put in.
While we here at Pacific Insurance Group specialize in life insurance, we can help you with any financial plans you may have, including retirement and long-term investment planning. To get started, visit our website at www.pacificinsurancegroup.com or call us at (425)-246-4222. We can’t wait to have you join the Pacific Insurance Group family.