Del curso: Financial Literacy: 401(k), 403(b), and Self-Directed IRA

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Using an IRA plus a company plan

Using an IRA plus a company plan

Del curso: Financial Literacy: 401(k), 403(b), and Self-Directed IRA

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Using an IRA plus a company plan

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- Whether you're saving for retirement through an employer sponsor 401k, or traditional, or Roth IRA, or both, one of the biggest benefits is compounding interest, which is interest earned on interest. That's why I advise you to start saving as early as possible. Here's an example of compound interest. Let me share with you a story about a client. Let's call him Peter. Peter had worked for a local newspaper in town as an editor and had a consistent, but moderate salary. In fact, in his 30 plus years at the newspaper, he averaged $45,000 a year. However, when he retired, he had accumulated more than $2 million in retirement savings. How did he do it? Well, he started saving in his company's 401k as soon as he was eligible. And he tried to max out his contributions to the plan every year. With company matching, compounding interest, and dividends, and growth of some company stock he also owned in his account,…

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