How can I save for retirement at work? – Michigan State University Extension

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If you want to continue or begin to save for retirement using your paycheck, you may want to consider opening an IRA account.

You want to plan for the future and save for retirement, but your employer is too small to offer a retirement plan. During the Obama administration, MyRA was introduced as a way for employees to make automatic deposits into a retirement program even if their employers did not offer a plan. However, the MyRA program is being phased out . If you have a MyRA account, you should have already received information on the phase out. If not, go to the MyRA web page and follow the instructions.

If you want to continue or begin to save for retirement using your paycheck, you may want to consider opening an IRA account, a form of retirement account that provides investors with certain tax benefits for retirement savings, according to investor.gov. These are self-directed accounts, meaning that you direct or decide where to invest money you put in the account. You will have many choices, so it will be important to do your research and possibly seek professional advice. However, assuming you meet the basic guidelines of the IRA provider, you can open an account and begin to invest for your future. There are several examples of IRAs, including the traditional IRA, Roth IRA, Simplified Employee Pension (SEP) IRA, and Savings Incentive Match Plan for Employees (SIMPLE) IRA. Read more about IRA accounts including ways to avoid fraud here.

Here are some basics that you will need to consider when you decide that you would like to open an IRA account:

  • First, you need to decide where you are going to set up the account. Some of the places that you can set up an IRA account are at a bank, brokerage firm, insurance company or even online. Regardless of where you set up your account, you need to make sure that you check out the financial institution to make sure it is properly licensed or registered. In addition, you will want to research an investment broker or advisor that you consider using. You can check out brokers and investment advisors at sec.gov.
  • Second, even if the IRA provider is legitimate, you will want to consider some other features before you open up an account. There are things to consider when selecting the IRA provider. Again, myra.gov provides helpful information and a comparison worksheet. Since the MyRA accounts are essentially Roth IRAs, the information assumes a Roth IRA, however, it is helpful for any type. You should consider:
    • Account Minimums – Some providers require a minimum deposit to open an account or a minimum account balance.
    • Fees – Some accounts charge fees to open or to move money. Be sure to check the fee structure before investing. For example, if you buy or sell an investment within your account, what will you pay in fees?
    • Funding method – How will you get money into your account? Regular electronic withdrawals from a checking or savings account? Direct deposit from your paycheck?
    • Customer Service – Is there an app for your phone? Is there online chat? Does your provider have a physical location where you can visit in person with an account representative?
    • Investor Education – Does the provider have educational material online, or do they offer courses that you can take? Remember, you want to understand what you are doing and you want to avoid being taken advantage of.
    • Online Reviews – Read reviews, articles and compare. Look for unbiased reviews that have not been sponsored by the provider.
    • Investment types – Remember that you direct what investments are held in the IRA account. Consider your savings goals and risk tolerance. For more information on investment options visit investor.gov and study. You may want to seek professional advice as well. If you do not know the difference between a stock, bond, mutual fund, etc. get help. Even if you do, there are many options that can make investing confusing.

Making financial changes in order to save money can take time and be challenging. Sometimes it helps to have help from a professional. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).

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