Two Ways to Save For Retirement
It is tough being even middle class in America. According to MarketWatch it is 30% more expensive than it was 20 years ago. With a mountain of bills piling up due to student debt, housing, and everyday living expenses it can be hard to set aside some money for retirement.
Latinx folks even have less set aside for retirement due to access and eligibility issues. Additionally, they just do not know how to get started. That is why I broke down two investment vehicles below.
401K – A 401k is a retirement savings plan that employers offer. It allows you to invest a percentage of your pay in the stock market and sometimes an employer will match your percentage input as well. If they offer a match that is basically free money. Key to note is that your investments come from your pretax money.
Roth IRA – A Roth IRA is an individual retirement account. You can open an account anytime yourself through Betterment or Charles Schwab for example. You can contribute to it with after tax money and it is great to use if your self employed or if your employer does not offer a 401k. To note there is a $6,000 annual contribution cap and income limit.
The difference between a 401K and Roth IRA is how they are taxed. Essentially one is pretax dollars and the former invest your after-tax money which means your investments grow tax free. It is important to have your funds invested in the market so you can attain a higher rate of return and the sooner you start the more time your money has to compound. The best time to start saving for retirement was yesterday and a good time to start is today.
