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Six tips to start saving for retirement in your 20s.

March 19, 2024

Are you a young adult in El Paso, Texas, overlooking retirement planning? Think again! Your present decisions wield significant power over your financial future. Let’s delve into the intriguing realm of compound interest and how leveraging it in your 20s can set you up for financial success.

 

Understanding IRA Mechanics

An IRA (Individual Retirement Account) is a simple yet potent tool for building a secure retirement fund. Opening an account costs as little as $1, and you dictate your contribution level

 

Unlocking the Magic of Compound Interest

Ever pondered the age-old question: “Would You Rather Have A Penny That Doubles Each Day For A Month Or $1 Million?” Surprisingly, the answer lies in the compounding magic of interest. Even with minimal funds today, time acts as your ally, exponentially growing your wealth.

Another way to optimize your investment is by maximizing your contributions. You can do this by contributing as much as you can afford to your IRA each year, up to the annual contribution limit set by the IRS. For most people under 50, the contribution limit is $6,000 per year (as of 2022).

 

Harnessing the Power of IRA Investing

By starting with as little as $10, $50, or $100 in an IRA account, you initiate a cycle of wealth accumulation. Automate your contributions from your paycheck monthly, and watch your money grow effortlessly over time. Explore our comprehensive IRA calculator to calculate your comfortable contribution amount and what your annual retirement income could look like.

Taking advantage of Employer Matching if it is available, is another great way to boost your retirement savings. If your employer offers a retirement savings plan like a 401(k) with matching contributions, prioritize contributing enough to get the full match before maxing out your IRA contributions, it’s essentially free money for your retirement!

 

Choosing the Right IRA

Two main types of IRAs exist: Traditional and Roth.

Traditional IRA: Allows contributions with pre-tax dollars, reducing taxable income. Experience tax-deferred growth with taxes applicable upon withdrawal.

Roth IRA: Contributions are made with after-tax dollars, offering tax-free growth and withdrawals during retirement. Income limitations apply.

Selecting the ideal IRA hinges on factors such as income, time horizon, and financial goals. Don’t fret; Raiz is here to guide you through this decision-making process, ensuring a seamless journey towards wealth accumulation.

 

Simplify Your Investment Journey with Raiz

Bid adieu to the complexities and risks associated with investing. Raiz offers a user-friendly platform to kickstart your wealth-building endeavors. Our expert financial advisors are on standby to address your queries and navigate you towards a prosperous financial future, completely free of charge.

 

Empower Your Future Today

Don’t procrastinate securing your retirement bliss. Embrace the power of compounding and kickstart your IRA investment journey today with just a few dollars a month!

Saving for retirement can be a long-term endeavor, and the habits you establish in your 20s and 30s can have significant impact on your financial well-being in retirement. By starting early and being proactive about saving and investing in your IRA, you can set yourself up for a more secure and comfortable retirement. But it’s never too early or too late to start saving for retirement, learn about saving for retirement in all stages of life with this insightful El Paso Times article.

 

Invest in your future with Raiz – let’s embark on this wealth-building journey together.

 

DISCLAIMERS

Federally insured by NCUA. Raiz Federal Credit Union and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, or accounting advisors before engaging in any transaction.

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