It might seem far off, but your first day on the job is the right time to be thinking about retirement and setting yourself up for success in your financial future. It’s important that you have a game plan from the beginning, so you can maximize your investing and make the best use of your employer contributions as well.
Maximize Employer Contributions
One of the most common errors we see with new investors is not taking full advantage of company retirement programs, especially employer matching and contributions. Most employers who have in-house retirement benefits in place also offer employer matches up to a certain percent. If you contribute up to 5% of your income, they will match with an additional 5%, basically netting you an immediate 5% raise, just one you can’t see for a few decades. This type of found or free money is a huge benefit for retirement planning, and can help ramp up your retirement plan quickly, especially in the early days. We strongly suggest that you find out if your employer offers a matching program and to maximize your contribution to take full advantage of the program.
Picking Your Retirement Plan of Choice
There are any number of investment funds and choices to make when setting up your retirement plan, but the most basic is investing pre-tax vs. post-tax dollars. Starting your first job generally puts you at the low point of your earning potential, a unique situation that has both tax and investment benefits. Utilizing an investment plan like a Roth IRA allows you to deposit post tax dollars today, and reaping the benefits of reduced taxed payouts in the future. It might seem counter-intuitive to pay taxes on money you don’t plan to touch for 30 years, but this can be a powerful tool to help maximize your money in the future, by paying a small price today.
Tools, like picking the right retirement plan and maximizing your contributions and employer match, are easy and immediate ways to set up your financial future for decades to come. But having someone who can see the whole picture and make sure you’re being smart with your finances early on can be the difference between smooth financial sailing and rocky shores ahead.
Whether it’s your first day on the job or the last, trust your finances to a team of experts with your best financial interests at heart.
No matter where you are along life's path, now is the time to be proactive with planning for your financial future. From retirement planning and college funding to opening up a new business, Croak Asset Management is here to help you work toward a financially successful future.