Age 49 and Under
If you start saving as early as possible in your career, you increase your chances of having a worry-free retirement when the time comes. The sooner you begin, the better you can take advantage of the 8th wonder of the world – compound interest. Albert Einstein said it and he definitely knew what he was talking about.
In addition to compound interest, having a retirement account can make you eligible for tax breaks and employer matching contributions. In 2020, employees can contribute up to $19,500 to their 401(k) plans or up to $6,000 in a traditional or Roth individual retirement account
“Roth accounts typically favor younger employees. The idea is to pay tax now at a lower rate, given your wages are expected to increase, and then have your investments grow tax-free,” says Rick Vazza, a certified financial planner and president of Driven Wealth Management in San Diego. “Using the traditional component of an account may be more appropriate for individuals already in peak earning years. Theoretically, they can avoid the tax in the currently high earning years, and pay the tax at a potentially lower tax rate in retirement.”
