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When it comes to saving for retirement it’s important to start putting money in the right places early.
What's Playbook? We're your friendly guide to paying less in taxes (legally!) and putting your money in the right places automatically. Money stuff can feel hard, but we’re here to help along the way.
Retirement might seem like it’s a lifetime away, which makes it difficult to prioritize long-term saving, particularly if you have other goals that feel much closer. But missteps while you're young could mean losing out on major opportunities to grow your money and build wealth.
Paying off loans, buying a house, saving for a dream vacation, these are just a few of the immediate costs that might seem more important today. And yes, you may want to prioritize tackling them first, but that doesn't mean you should put off starting a nest egg entirely. When it comes to retirement investing, every day that passes is lost earning potential.
The best time to start planning for retirement is the day you get your first paycheck. The sooner you put money away the more time it has to grow. By investing early on, your money will be working for you over the next couple of decades. When retirement finally arrives you won’t need to play catch up.
Now when we talk about putting money “away” we aren’t referring to a savings account with your local bank. Yes, technically a savings account earns interest, but it will not grow as efficiently as other accounts specifically intended for retirement. You want your money to grow aggressively over your lifetime. Taking advantage of tax benefits or accounts with higher earning potential is key. It’s also a lot easier to make that happen over the span of 40 to 50 years than it is over 15 to 25 years.
While there are many things out of our control, finances don't have to be one of them. Where you ultimately put your money is up to you, but it’s always a good idea to listen, learn, and leverage the various plans and outlets available to help set you up for financial freedom down the road.
Here are some reasons you may not have thought of:
A great place to start is by taking advantage of your employee benefits. Programs such as a 401k, IRA, or an HSA (Health Savings Account) are great places to start.
A 401k is an investment account based on the state of the stock market and will continue compounding throughout your career. One of the many advantages to this type of investment account is some employers will match your contributions up to a certain percentage. Think of it as a bonus from your boss. Plus, the money invested in a defined contribution plan is pretax, meaning it’s deducted from the gross amount prior to taxes being taken out, giving you a smaller taxable income.
In addition to a 401k, there are other types of tax advantage plans like IRA’s (Individual Retirement Account) and HSA’s (Health Savings Account) to help maximize the most return on your money.
Thinking about the best “home” for your money and mapping out your financial retirement plan can become overwhelming and frustrating. Your needs fluctuate so it's difficult to set it and forget it. But sticking to a consistent strategy is one of the best things that you can do for your money. If you don't have the time or desire, trusted experts like Playbook or a local financial planner can help build a plan and make sure your money is routed into the places where it earns the most. So while you’re working to earn a living now, your money is working to ensure your future.