Is my retirement account a good investment?
We often get asked this question by retirement plan participants. Our goal is to help you better understand the ‘investment’ component of your retirement plan.
In short – a retirement account is not an investment. It as an account that you can put money in and select how you would like that money to be invested.
Some of the major benefits of putting money into a retirement plan offered by your employer include:
Tax benefits – you can defer taxes on the money you put into the account and on any investment earnings until you take the money out in retirement. You may even have the option to make Roth (after-tax) contributions which offer a different type of tax benefit (see our article on Roth vs. Traditional for more information).
The ability to invest the money – you will have a list of investment options available within your account. This allows you to allocate the money you contribute and invest it in a way that aligns with your goals for the account.
Employer contributions – your employer may provide a match. This means they will contribute a certain percentage to your account based on the amount you contribute. An example of this would be if your employer matches 50% of your contributions up to 4% of your salary. In this case, if you contribute 4% to your account, your employer will also contribute 2% (50% of that amount) to your account. We recommend always taking advantage of this benefit if you are able and it is available to you. If you are not sure how your employer contributions work, check with your employer for more details.
Questions?
If you have questions on your retirement plan and how to make sure you are taking full advantage of the plan available to you, our planners are happy to help. Contact us at (607) 217-5091 or info@seedsuitek.com with any questions.