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To Roth or Not to Roth – Wait, What?

With Roth IRAs, 401Ks and financial planning options listed throughout many employee benefits packages and on marketing in financial institutions, it’s easy to be confused on what your role is with retirement planning. You may even be telling yourself, “I just started making money, do I really need to start preparing for retirement too?

The short answer is Yes and the long answer involves research, planning and financial know-how, with the answer still resulting with a Yes. Since everyone doesn’t make the same amount of money or spend the same way, it’s hard to put into words a perfect list on how to retire in Hawaii by the time you’re 65. With that said, we have created the below list of things every Quarterlifer should know about retirement planning TODAY, before you wake up, are 90 and still working your BUTT OFF at the same job you’ve had for 60+ years.

  1. Pay Off Debt. We know, college was expensive. Between college loans and credit card expenses for spring breaks, nights out and eating way too much late night food, you are probably still paying for those four years of your life well after you graduated. It’s ok, best four years of your life, right? So, now that you’re an adult, it’s time to focus on saving and setting a budget to start paying down your debt. You can’t fully get serious about your future until you take care of your past, so buckle down, talk to a financial consultant and work out a plan to manage your debt and pay it off.
  2. Take Advantage of Your Company. Yes, we said it. But, we meant it in a good way. Although you may not be a C-Level executive at the company you work for, odds are, there are some employee benefits that you can take advantage of. From insurance to bonuses, and yes, retirement planning, there may be options there for you, so you should take advantage. Talk to your HR rep about 401K or retirement options, and do your due diligence. Does your company have a 401K matching program? Do they offer free meetings with financial planners? Take advantage of any freebies or seminars at work, and you may be able to start planning for retirement faster than you imagined.
  3. Start Contributing. You knew this tip was coming and are probably rolling your eyes now that you’ve seen it. Believe us, no matter how small your paycheck, you CAN start contributing to a retirement plan.  First, research the one that works best for you. Should you go with a traditional IRA, a Roth IRA or a 401K? While these may all sound like a foreign language, believe us, understanding the differences is an important step towards contributing. Once you’ve made the leap and talked to a representative at your financial institution (Delta Community Credit Union; wink wink), the decision making process becomes easy. Start small in your contributions. Contribute what you can and then continue increasing your percentage of giving over time. Our recommendation is to keep goals reasonable. If you can aim to contribute 10 percent of your salary for your retirement plan before your mid-30’s, you will be well on your way towards strawberry daiquiris with umbrellas on the beach in no time.