As a young person, you may think the worst mistake you could make is accepting the wrong job offer or getting in with the wrong company, but we’re here to tell you it’s not. The real mistake is not opening an Individual Retirement Account (IRA) early in your career! While there’s no set age requirement to start saving, IRAs are available to individuals of all ages and can significantly further your retirement goals if contributed to early in life. Our team at Legacy Bank is dedicated to helping our customers select the right retirement vehicle for their long-term goals and is detailing the benefits of opening an account early in your career. Don’t waste another minute—find out how to extend your savings today!

Grow Your Money With Compound Interest

Are you familiar with compound interest? If not, you’ll be excited to know you can make money simply by saving! When it comes to compound interest, your money grows as your interest builds upon itself over time, meaning the earlier you start making contributions to your IRA, the more compound interest you will accumulate. Even modest contributions made in your twenties can significantly impact your retirement nest egg.

Let’s See Some Examples: Check out the following table to see how your money can grow in real-time based on your initial investment and monthly contributions!

Save in Smaller Intervals

You may be thinking: why start saving today when I have my entire life ahead of me to save? In actuality, the better question is, why not? The best part about IRAs is that you don’t need to make large contributions to make a difference. You can save in small intervals, adjusting your contributions as you continue to increase your salary. Start small, setting aside a portion of each paycheck until you can eventually make larger contributions. By consistently saving over time, you will build your retirement savings without feeling significant financial strain.

Have access to an employer-based plan? Many employers offer to match a certain amount of retirement contributions if you have access to an employer-based plan. Take advantage of these matching contributions for an extra boost in your savings, and have the funds taken directly out of your paycheck so you don’t even notice they’re being saved!

Receive Tax Breaks for Investing

Not only can you save significant money for retirement with an IRA, but you can receive tax breaks for investing. Traditional IRAs offer tax-deferred growth, meaning you can deduct contributions from your taxable income in the year you make them. This not only reduces your current tax bill but also allows your investments to grow tax-free until withdrawal during retirement. On the other hand, Roth IRAs, while funded with after-tax dollars, offer tax-free withdrawals in retirement. Understanding these different options and tax breaks early can help you optimize your retirement savings strategy.

Maintain Control of Your Future

While all employer-sponsored retirement plans benefit you when saving for the future, IRAs allow more flexibility and control. As opposed to 401(k) plans, where you’re a simple participant subject to your employer’s plan changes and limited investment options, IRAs allow you to be the owner. If you ever switch jobs, your access remains the same, and you can even rollover funds from other 401(k) accounts! You also have a wide range of investment options, including stocks, bonds, mutual funds, and more, allowing you to tailor your investment strategy to your risk tolerance, goals, and preferences.