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5 Tips for Starting a Retirement Account When You Get Your First Job
Posted By Miranda Marquit On 09/03/2013 @ 10:36 am In Career,Investing,Retirement | 3 Comments
Your first job is a major milestone. You can learn a lot from your first job , as well as start down the path toward financial freedom (if you manage your money right).
Unfortunately, too many us start first jobs and our thoughts go to how we’re going to spend our money. When I started my first job in high school — and even when I started my first job after college — I could think of little beyond how I was going to spend my money.
It didn’t really occur to me to save some of my money (even though my parents had tried to drill that lesson into my head), much less open a retirement account and start contributing. If you are starting your first job, it makes sense to pay attention to the future. Don’t forget to pay yourself first. Here are 5 tips for starting a retirement account  with your first job:
It may seem silly to contribute $25 out of each paycheck to your retirement accounts, but it’s not. While you aren’t going to fund your future with $25 per paycheck, you will be developing a good habit.
The point is to get in the habit of contributing some portion of your paycheck to your retirement. If all you can handle is $25 per paycheck for now, set that aside. But set aside something.
One of the best things you can do to ensure that you always have “enough” to make your retirement contribution is to make it automatic . Most employers will allow you to make contributions to the plan before your paycheck is cut. Others will directly deposit the amount in the investment account of your choice.
Even if you have to use an IRA or some other non-sponsored plan, and even if your employer won’t deposit that money for you, you can have the money automatically transferred from your checking account to your retirement account. If you don’t have to think about it, and you adjust your spending according to your after-savings paycheck, it won’t be an issue.
Some employers still offer matching contributions when it comes to your retirement account. This is free money for your account. Do your best to max out your match. That way, you will get the maximum amount of free money for your future.
Don’t throw away thousands of dollar on fees . Do a little research into your retirement plan. Find out if there are low-cost fund options. ETFs can be especially inexpensive and quite helpful to your portfolio. Also, consider the administrative costs with your plan. In some cases, it makes sense to do what you can to get the employer match (if there is one) and then invest in something else with the rest of your money.
Remember: Your retirement account isn’t an emergency fund. In most cases, withdrawing money from a tax-advantaged account before the age of 59 1/2 means a 10% penalty plus taxes. Even if you take advantage of lenient policies for a Roth IRA, you still can’t replace the time you lose while your capital wasn’t earning interest.
(Photo: Tax Credits )
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 learn a lot from your first job: http://www.bargaineering.com/articles/lessons.html
 starting a retirement account: http://www.bargaineering.com/articles/making-5-common-retirement-account-mistakes.html
 make it automatic: http://www.bargaineering.com/articles/automating-your-finances.html
 throw away thousands of dollar on fees: http://www.bargaineering.com/articles/investing-fees.html
 Tax Credits: http://www.flickr.com/photos/76657755@N04/7027606047
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