Hi, I'm a 20F and I have had a full-time job for three months now, but I might have to quit soon or at least go to part-time in September because of school, which will put me only at nine months at my job. I am wondering how you set up a retirement account? Is it through your work? I think my work has a retirement plan, but it only starts after one year and I don't think I'll be able to stay for that long. I think I can try and stay part-time but I don't know if that will even be worth it as far as retirement, because companies probably offer less to their part-time employees? If I don't stay, is there a way to set up a retirement account not attached to my workplace?
How to set up a retirement account?
byu/joan1431 inpersonalfinance
Posted by joan1431
5 Comments
I set up a Roth IRA through vanguard. Since it’s not attached to an employer I don’t need to worry about moving it any time I switch jobs. I funded this IRA for many years up to max before I had enough to put more than 7k in retirement per year. Just make sure you remember to invest the funds in something so the money grows.
Individual retirement account, AKA IRA
https://reddit.com/r/personalfinance/w/iras?utm_medium=android_app&utm_source=share
Probably best, as the other commenter wrote, to set up your own Roth IRA.
An IRA is an individual retirement account, so it’s not tied to any work place. You can open one at most brokerages.
Recommend a brokerage with low cost index funds: Vanguard, Fidelity, and Charles Schwab.
For more information about Roth IRA, see this post & the comments:
https://www.reddit.com/r/personalfinance/comments/1liyjjn/can_someone_explain_how_roth_ira_works_and_what_i/
Yes, you can open Roth IRA with Vanguard, Schwab or Fidelity. This is not tied to work. Stick with low cost total stock index funds for instant diversification. Stay the course no matter what market news you hear.
There are multiple types of retirement accounts (speaking from a USA perspective). The most common (outside of government positions) are the 401(k) and IRA. They are not the only games in town, but they are the major players.
The 401(k) requires sponsorship from your employer. Not all employers offer them. Some let you start contributing with your first paycheck, others make you wait a year or more before you can join. Some match a portion of your contribution, some do not. Inquire with your HR or benefits team for details. FWIW, the 401(k) is often one’s primary retirement fund, with a contribution limit nearly three times higher than the IRA – I have turned down job offers because they required a one year wait before contributing. That would have translated to tens of thousands of dollars lost over my lifetime. Kept looking, found a job with no waiting period.
You can contribute to an IRA on your own (assuming you meet all the other requirements on income), and it is more or less as simple as just creating an investment account with almost any broker or bank (I’m not making recommendations here, but as examples: Fidelity, eTrade, Wells Fargo, Schwab – ALL offer IRA accounts), designating the account as an IRA account (often just a checkbox on the account setup form), then contributing funds to it just like any other savings account (link your primary checking account, transfer the money). The devil is in the details, though – know the annual contribution limits, keep records of all activity including annual summaries. Is the IRA of type Traditional, or Roth? How much will you contribute each year? What will you invest in? Can you take any tax deductions for your contributions or not? That all depends on your income and overall tax situation.
If you’re in the USA, then get familiar with IRS Publication 590a: [https://www.irs.gov/pub/irs-pdf/p590a.pdf](https://www.irs.gov/pub/irs-pdf/p590a.pdf)