If you’re looking for some motivation
Retirement. Ahhhh. First: Picture yourself when you retire. Get specific about it — what does your day look like? It can help with the planning process to visualize something tangible to shoot for.
Retirement looks different for everyone (if you even retire at all, that is). If you like the idea of spending your retirement years on the beach sipping Mai Tai’s, you gotta start saving (like now). Depending on your job situation, you may have a 401k, an IRA, a SEP IRA. And when it comes to retirement talk, this is tax code speak for the money you’re saving for retirement.
If you’re wondering which account type is best for you
For most people, the decision is between an IRA and a 401(k). Both have tax advantages, but they’re different in some key ways. Here’s an in-depth explainer on what they are and how to decide which one’s best for you.
Then, once you’ve decided on either an IRA or a 401(k), you might find yourself with another decision to make: Roth or traditional? Or both? The difference here has to do with taxes and timing. For help deciding, check out the explainers here on Roth vs traditional IRAs and Roth vs traditional 401(k)s.
And if you’re self-employed, there’s a special type of IRA to consider: the SEP IRA. Here’s the breakdown on them and why they tend to be such good options for the self-employed.
If you’re trying to figure out how much you actually need to save
How much do I need? This answer is different for everyone.
Ellevest can help you answer this question, too. Their investing platform makes it really easy (dare I say — fun) to understand how much you need. All you do is enter your personal info into consideration — things like your gender, savings, income, and projected future income — and Ellevest gives you a plan designed to help you get where they think you’ll need to be. They also suggest how much you should put aside for retirement. As a rule of thumb, many advisors recommend the 50/30/20 rule when it comes to how much you should budget for retirement. It’s a high-level, flexible budgeting framework that can help you control where your money’s going without having to count every penny.
Create a free financial plan with Ellevest. They’ll recommend a retirement goal number, down to the dollar.
If you aren’t sure how this whole 401(k) employer match thing works
Did someone say “free money?” Yep … it was your employer. If you have a 401(k) employer match available to you, it’s in your best interest to take full advantage of that. (aka max it out. Here’s how a 401k match works and why that’s the case.
If you have an old 401(k) or two from a past job just hanging out
Hey, it happens to the best of us. There are a lot of variables involves when you move from an employer and get a new job, and it’s easy to let a former employer’s 401(k) or two get left behind. The good news is that if you left it, you can probably still roll it over — either into your current employer’s 401(k) or an IRA — even if it’s been hanging out for a while. Not sure what that involves? Ellevest can help you answer this question, too and help you start your roll over — no strings attached (more on that below).
Have an old 401k hanging out? Ellevest can help you find and move that old 401(k) or 403(b) over.
If you think you might be paying too much in fees
It’s possible. In fact, high fees on your investments are really bad news for your bottom line. According to the Securities and Exchange Commission (aka the SEC), higher fees can cost you tens of thousands of dollars over a 20-year timeline. So, how can you find out if your fees are too high?
Basically, there are two ways of finding out. First, you can start a rollover — for either an IRA or a 401(k) — to Ellevest, no strings attached. They’ll take a look at the fees you’re paying now and let you know what they think your best bet is going forward, even that doesn’t mean recommending that you switch to them. Why? Because, they’re a fiduciary (aka they’re the good guys) and being a fiduciary means that since we’re an SEC-registered investment advisor — so, they’re obligated to act in your best interests.
But the financial industry doesn’t follow the same standards when it comes to providing investment advice to clients. Investment advisors like Ellevest have a duty to put your needs first. No ifs, ands, or buts about it.
So, do your research. I did my due diligence and most of the 401(k) plans I saw had higher fees than Ellevest’s do. So, I’m happy I used them. Either way, no matter where you start with your retirement planning and investing, the most important thing is that you get started. (Because you don’t get that fabulous — Mai Tai sipping — future retired life if you don’t do that.)