Although it doesn’t seem like an especially pressing issue (as many of us are starting out or in the peak of our careers), adequately preparing for retirement is really important. Hot girls find multiple avenues to invest and ensure the fruition of their old age so they can continue to live independently. You’re guaranteed financial security when you start as early as you're able to, based on education and monetary ability, so we want to share 3 ways that you can begin investing ASAP!

‍

1. IRA: Individual Retirement Account

An IRA is an investment account, meaning that when you deposit money into it, that money is invested in stocks, exchange-traded funds (ETFs), bonds, and other branches of the stock market. The investment aspect of an IRA ensures a maximizing of your retirement funds: there will be more money when you withdraw, as the interest from the external investments ensure your money’s growth. 

IRAs can be divided into several categories, but there are two that are most common: a Roth IRA and a traditional IRA. They both function in similar ways, but the ways in which they’re taxed is a bit different. Regardless of their differences, all IRA accounts are operated by you--not by an employer that controls your access to and/or contributions to a retirement account. Importantly, IRAs have a limit--depending on your earned income--on how much you can contribute to them yearly. This limit differs based on the type of IRA account and the year. Contribution maximums are established based on inflation rates and government-established rates. These maximums change yearly. 

    a.) Roth IRA

• A distinctive feature of Roth IRA accounts is the money you contribute to it--“after-tax dollars”--does not get taxed or fined, even if you withdraw before retirement. “After-tax dollars” refers to the net income you bring home after taxes. Because you’ve already paid taxes on that income, you do not have to pay more after you allot it to a Roth IRA account. 
• Another Roth IRA bonus: you can take out the money you’ve put away prior to retirement (which is 59 ½ by most accounts) without being penalized or taxed. 
• Lastly, in terms of yearly federal taxes, Roth IRAs do not receive immediate tax breaks. The Roth IRA tax break arrives at the time of withdrawal, as there are no fees or taxes associated with withdrawing the money. This is the biggest distinction between Roth IRAs and traditional IRAs. 

     b.) Traditional IRA

• As compared to a Roth IRA, a traditional IRA is suitable for more stringent savers. You are strongly discouraged from withdrawing any money before 59 ½, save certain expenses like down payments for houses or paying for education, as there is a 10% tax that accompanies the withdrawal.
• Similar to the Roth IRA, the money deposited into a traditional IRA is invested into the external stock market. This money is guaranteed to grow because of interest and investment trends. 
• Traditional IRAs receive annual tax breaks, as opposed to Roth IRAs (which do not receive these breaks). This means that the money deposited into a traditional IRA is “pre-tax dollars” (the tax is deferred until withdrawals are made. So there’s more money available up-front) i.e., pre-retirement--but there will be heftier taxes associated with accessing the traditional IRA. 

If you’re interested in a more comprehensive breakdown of the similarities and differences between all IRAs (and not just Roth/traditional), you can check this out.

2. 401(k) Account

This kind of account is opened and managed by an employer; compared to IRAs, which are self-directed, you cannot open a 401(k) without a participating employer. An employee that signs up for a 401(k) agrees to the employer withholding and investing a percentage of their pay. Usually, the employer offers a range of investment options for employees to choose from, like stocks, mutual funds, and different kinds of trusts. Like the IRAs, 401(k)s are contingent upon investing into external markets, which guarantees a higher return over time.

• Because a 401(k) is coupled with an employer, there are oftentimes “matching” benefits that employers provide. A “match” is when an employer monetarily matches the contributions to your 401(k). Sometimes, companies will match dollar-for-dollar your contributions; other match policies are $0.50 for every dollar. Because each company offers different matches, it’s important that you understand your policy and consequent options. 
• There are traditional and Roth 401(k) options, just like IRAs. You can find more about that here. 
• There are required minimum distributions (RMDs) for 401(k)s, meaning that you’re required to take out a given amount of money once you reach retirement age. The age for RMDs changes yearly, but in 2023, the age was 73.

‍

3. The 1,000-Dollar-a-Month Rule

A helpful rule of thumb when planning for retirement, especially as it seems that the savings amounts are somewhat arbitrary, is assuming that you'll need $1,000 per month in retirement. It's assumed in the financial world that you'll withdraw about 5% of your retirement investments each year of retirement. If you assume that your retirement will be twenty years long, then you'll need a total of $240,000. If you anticipate retiring earlier, then you might want a higher allotment of your current income to go towards your retirement accounts. Alternatively, you can also plan to spend less money in retirement. Because the methods we've covered are based on the stock market and more general economy, it's critical to keep a keen eye on the successes and failures of investments. If you notice a downwards trend in the stock market, you might want to move towards real estate investments or a different form of retirement investing. You always want to account for at least $1,000 a month--you can do it!

Even though we didn’t cover all the retirement options here, we encourage you to do your own research! NerdWallet and Investopedia are excellent, comprehensive resources for your personal finance toolkit. Go secure that retirement!