3. Compare the Tax Benefits:
Traditional IRAs allow you to make pre-tax contributions, so you only pay taxes when you make a withdrawal. On the other hand, Roth IRAs are funded with post-tax money, but withdrawals are tax-free.
4. Check for Employer Plans:
If your employer offers a 401k plan for employees and you meet the eligibility criteria, join it. Make the maximum contribution that your employer will match since that’s free money going into your retirement fund.
5. Automate Your Savings:
Make saving a habit instead of a luxury, and take temptation out of the picture. Set up a direct debit for your savings plan, so a certain percentage of your earnings or a fixed amount goes into it every month.
6. Contribute More Every Year:
If you can’t max out your IRA contributions right away, at least put in the maximum amount you can. Increase this amount every year, as your income starts going up, so your nest egg will grow that much faster.