In general, the sooner you begin saving for retirement, the more time you give yourself to put money away. Many people choose to invest in a retirement plan like a 401(k) or IRA as a method of working towards their financial goals. If you are just starting out, you may find it difficult to choose between plans. It is possible (and actually not uncommon) to invest in both. However, before deciding to invest in one or more retirement plans, you will want to consider factors such as the tax advantages available to you from that plan and the maximum contribution you are able to make to it. Speaking with a financial advisor is one way to discuss your options as you work to develop a strategy that aims at a financially stable retirement.
Perhaps one of the most obvious differences between a 401(k) and IRA is that, with a 401(k), your employer may offer matching contributions. Usually, this means that as a portion of your income is placed into the retirement account, your employer will contribute additional funds in proportion to what you’re investing. For this reason, it is a common strategy to invest in a 401(k) first to maximize contributions from your employer. However, this does not always capture the full scope of an individual’s financial situation; there may be other factors to consider before choosing to prioritize one type of retirement account over the other.
When deciding which retirement plan to prioritize, you are essentially thinking about how to maximize the amount of money you are likely to receive from the plan in the long term. The amount that you are able to contribute each year and the investment options available to you should both be considered. The tax implications of each plan will also vary from situation to situation, and you may find it helpful to discuss your preferred plan with a financial advisor.
At Harvest Wealth Partners, we offer a range of services for individuals looking to save for retirement. Our advisors will start by discussing your financial goals with you. Once we have a better understanding of key factors (like when you wish to retire, and how much money you will need to do so), we can suggest strategies that aim at meeting those goals.
When choosing a retirement plan such as a 401(k) or IRA, you will want to consider factors such as the maximum contributions you can make in a year and the tax implications of doing so. Working with a financial advisor is one way to explore your options and get professional advice. To learn more about our services at Harvest Wealth Partners, or to schedule a consultation, contact us today.
Harvest Wealth Partners is committed to helping our clients work towards a successful future. We believe in your potential to understand the financial options that can lead you to your goals. Call us today to partner with our team. We look forward to continuing our mission for years to come.
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