[Kill Joy]

I am creating this thread to convince you to open up retirement savings account. Why? Because the majority of the userbase is young. Young people are mostly reckless with money they have received. By putting away some of that money, your future self will thank you!

Here are a couple graphs showing you the potential money you can make if you start investing in your retirement now:





What kind of retirement accounts are there?

The two types of retirement accounts are sponsored by your employer and directed by yourself:

1. The most common type of an employer sponsored retirement plan is a 401k plan. Usually contributions are made directly from your paycheck into your 401k plan. Some employers will promise to match any contribution you make, up to a certain amount. There are limits to What you can contribute.  The contribution for 2019 is $19,000. If you are over the age of 50, your limits are higher. These can change year to year. The match from your employer does not count towards your personal limit!
   
   
2. An Individual Retirement Account (IRA) is the next most common account. This account is independent of your employer. The contribution limit for 2019 is $6000, or $6500 if you are over the age of 50.
   

Are there any taxes on these retirement plans?

There are two different types of taxes for these plans:

1. Traditional retirement accounts are pre-tax. This means the money you put in does not get taxed as income. However, the money you withdraw in retirement is treated as income that year.
   
   
2. Roth retirement accounts are post-tax. This means the money is taxed in the year you earned it. However, withdrawn money in retirement is not treated as income.
   
   For both of these accounts, withdrawals for retirement are for when you have reached the age of 59 1/2. If you take money out before then, you will be hit with a fee/tax.
   

What one is right for me?

If you’re currently in a low tax bracket, which is anything in the low 20% range or even lower, a Roth IRA is a good choice for you.

If you are in a high tax bracket or close to retirement, you should go with a traditional IRA. Why? After their 40s or 50s, people tend to migrate to a lower tax bracket due to full or semi-retirement, taking on lower-paying but more meaningful work, or simply needing to draw less income if expenses have gone down. And since withdrawals from a traditional IRA are taxable as income as long as they’re taken after age 59½, by choosing a traditional IRA you save again on the backside because you’re taking out that money when you’re in a lower tax bracket.

Here is a picture explaining:



Now you know what account you want to have, but where do you get one?

There are many different companies that have retirement account plans. Take a look at the ones reviewed here: https://www.nerdwallet.com/blog/investin...providers/

I personally use a Roth IRA account with Vanguard. You need a minimum of $1000 to contribute to a retirement fund. Vanguard has lower expenses, lower turnover and more index funds. That means higher returns and something I am looking for as an early investor.

Early investors should consider taking on more risk. As they get older they should tone down their risk with investing as they are nearing retirement age.

What if you pass away before you retire?

It is wise to add a beneficiary to your retirement account. Beneficiaries can be your spouse, children, grandchildren, or anyone else you choose.

[Sharjah]

What if you die before retirement age?

[webdev77]

Very nice thread, but I'm curious about your first graph. The Y-axis label says monthly savings. How many people who are 55+ can save more than $60k a year? That's pretty much impossible unless you are earning more than $100k a year at that point and have no kids living at home anymore.

[Prophett]

What if you die before retirement age?

This. Do they keep the money?

[Kill Joy]

What if you die before retirement age?

You should name a beneficiary then. Beneficiaries can be your spouse or children if you would like.

---

Very nice thread, but I'm curious about your first graph. The Y-axis label says monthly savings. How many people who are 55+ can save more than $60k a year? That's pretty much impossible unless you are earning more than $100k a year at that point and have no kids living at home anymore.

You are correct in saying it is very near impossible unless you have a very well-paying job.

The age of 55 is very near retirement age and since the person has not contributed any money towards their retirement, they will have to save up a hell of a lot more. Key point in why you should start saving earlier rather than later.

[SIM-403479]

I have already started to pay in to a pension scheme (retirement fund).

You save tax on the payments you make now and you also get contributions from the employer and pension providers etc.

It is definitely worth starting if you haven't already.

[Kill Joy]

I have already started to pay in to a pension scheme (retirement fund).

You save tax on the payments you make now and you also get contributions from the employer and pension providers etc.

It is definitely worth starting if you haven't already.

What is it called?

[SIM-403479]

What is it called?

What is what called? My pension scheme?

[Bluffer]

My optometrist is a millionaire and he was trying to tell me about this like 2 years ago, just seems like a pain in the ass honestly.

[Kill Joy]

My optometrist is a millionaire and he was trying to tell me about this like 2 years ago, just seems like a pain in the ass honestly.

How is it a pain in the ass to set aside a some money? It's just like depositing it into your savings account with your bank.

[Bluffer]

How is it a pain in the ass to set aside a some money? It's just like depositing it into your savings account with your bank.

Banks ask questions that I can not answer.

[SIM-403479]

Banks ask questions that I can not answer.

It isn't the bank. You literally transfer it in to a pension. No questions asked.

[webdev77]

Banks ask questions that I can not answer.

Sounds shady. If you can't answer, find the help of someone who can.

A few hundred thousand dollars is definitely worth the time.

[SIM-3341619]

Interesting post I have learned about this before, for myself I like to see my money doing something rather than sitting in a bank and waiting for 60 years for it to turn into one million. We all can die at any given moment so I think it's best for everyone to invest your money into building your own skillsets and monetizing that. Although I am not saying this is a bad idea at all.

[Sholi]

Screw that, save some capital aka transfer atleast 25% or more of your income every month to your savings account until you have atleast 100k and then invest.

Make money, then use that money to make more money. Don't let it die with you.