Starting Your Retirement Savings Early | Cleveland Bradley County Teachers Federal Credit Union

So you’ve just started your career, and along with learning a new job and all the other official “adulting” you are now doing, you need to also start thinking about where your money is going to go.

It may feel entirely too far away to even begin thinking about retirement as you step into your career, but the sooner you start, the more secure your future will be. While taking money out of your paycheck for savings might not be the most appealing idea, saving now can mean retiring earlier—and retiring more comfortably.

Saving early is ideal, but it can also be confusing trying to decide how to split your money up. Be willing to do a little research on the different options available to you in order to make the best decision, and rest assured that you can make changes as life evolves later.

Take Theirs, or Go With Your Own?

When you accept your position and start your career, investigate all the benefits your employer is offering. Work with your HR department or manager to break down insurance offerings and retirement plans. Most employers will also arrange for you to meet with representatives from the companies they partner with in order to best understand the varying plans. Take advantage of every piece of information they give you, and ask plenty of questions to ensure your clarity.

If your employer offers a 401(k), investing in this plan allows you to put money in that will not be taxed. Since this money comes directly out of your paycheck, it can lower your overall taxable income.

Many employers offer a match when you put a certain amount of money into a 401(k), as well, which builds your account without extra cost to you. Early in your career, it is a good idea to put just enough investment into your retirement account to meet your company’s match.

An IRA is an individual retirement account that you can invest in outside of your employer. IRAs offer a lot of flexibility with your investment, and can be deducted from your income pre-tax. These are a great option if your company doesn’t offer a retirement plan or you want to supplement the plan they do offer. For someone just starting their career, an IRA with a bank can be ideal since you already have a standing relationship with them.

If you’re employed by a school system, you will have access to some specialized retirement plan options, so be sure to talk with your HR representative to learn the specifics and how to take advantage.

How to Spend

Even if your starting salary doesn’t feel like enough to invest, there are ways you can start bolstering your savings above and beyond buying into employer retirement plans. Many companies are now offering many other financial benefits that could allow you to pay down debts. This can include student loan assistance, health savings accounts or even financial counseling.

The sooner you are able to address your debts, the sooner you can start funneling more money into your savings and retirement. Take advantage of the debt reduction plans offered to you, and utilize financial counseling if it is offered. It is tempting to cut some of the withdrawals in order to have more take-home money, but by taking out money now you are securing a better financial future.

“Adulting” isn’t easy, but getting your first job is something worth celebrating. Celebrate starting a new chapter in your life, but never stop planning for all the chapters to come as well.

Ready to get your financial future secured? Contact us to get started!