How to Start Saving for Retirement

Savings. Retirement. Money. MAKE IT STOP.

If you’re anything like me, you eager to see you’ve saved up enough to eat out next week instead of having to make another Costco trip for the week. So obviously, I had never looked into saving for retirement.

I’m not saying I don’t think it’s not important. Of course not! I think it’s crucial we begin to have some kind of emergency funds for any, well, emergencies. The only problem- I have no idea where to begin.

Luckily, my job offers a 401k Retirement Plan through Betterment Investment.

However, before committing a portion of my paycheck to my Retirement, *dun dun,* I needed a few questions cleared up.

Traditional vs. Roth

“Pre-Tax (Traditional) 401(k): Contributions made with pre-tax income will result in a tax deduction for the amount contributed. Contributions are not counted as income, and they will lower your tax bill come April. When you contribute pre-tax, you are allowing your assets to grow on a tax-deferred basis. By the time you retire and begin to pull money out of your account, every dollar withdrawn (including the growth) is taxable as ordinary income.” Betterment

After-Tax (Roth) 401(k): Roth contributions are the opposite of pre-tax contributions. While this option may not have been widely available in the past, many retirement plans now offer it. When you contribute to these accounts, you won’t receive a tax break, but all growth and qualified1 future withdrawals are tax-free. Because you already paid taxes on this money when you contributed to the account, you won’t be taxed on this money when you withdraw it in the future.” Betterment

The main difference: Timing of taxes.

I am by no means an expert at saving money or choosing the right plan. However, I am still fresh enough to the game to experiment without much fear of my retirement money “not growing fast enough.” Currently, I have set half of my retirement savings to Roth and half to the Traditional plan.

Low-Risk vs. High-Risk Investments

“A ‘low-risk investment’ is an investment in which there is thought to be just a small chance of losing some or all of your money. Typically, a “low-risk investment” has a low amount of upside. On the other hand, a “high-risk investment” has a high amount of risk and usually a high potential reward.” Dave Manual

“A ‘high-risk investment’ is an investment that carries a high degree of risk – meaning, there is a strong chance that you could lose a substantial amount (or all) of your investment. The potential benefit of a “high-risk investment” is that there is a chance that you could make a very high return on the investment as well. ” Dave Manual

The Bottom Line: There are no perfect definitions or measurements of risk, but inexperienced investors would do well to think of risk in terms of the odds that a given investment (or portfolio of investments) will fail to achieve the expected return, and the magnitude by which it will miss that target. By better understanding what risk is, and where it can come from, investors can work to build portfolios that not only have a lower probability of loss, but a lower maximum potential loss as well.” Investopedia

Company Plan vs Personal Plan

Before I begin, I want to make it clear that I am not a strong point-of-reference ment plan. I am simply laying out a few, quick facts that answered my initial retirement-plan questions. It has also been recommended to me to choose a savings plan outside my company’s plan. Personally, I am looking into putting my money into stocks and mutual bonds.  do not worry about this now. You can’t worry about later if you can barely sustain yourself now.

In case you wanted other options in where to hold your savings, check it out here.
Share your experience with how you save money for the future.



  1. February 7, 2020 / 1:40 PM

    In my opinion, if you want to have money during your retirement, you should invest money, when you are young. Will you agree with my opinion?

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