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Getting Schooled on Retirement

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After five years of experience leading a TPA call center in North Carolina, Andrew decided to move west to explore parts unknown and follow his passion of helping others. Walking through the doors of Ubiquity Retirement + Savings, formerly The Online 401(k) for the first time, he knew he’d found something special. Continuing to delight clients and partners alike and 10 years later, Andrew has been able to develop new teams, co-found a non-profit of strategic alliances, co-produce a hard-hitting documentary about the looming retirement crisis, and still had time to spread the savings gospel far and wide. Using social media and actual media alike (Wall Street Journal, Fox Business, PlanSponsor, and more), you’ll find no one who likes talking retirement more than this guy!

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July 21, 2015 at 9:58 am
Personal Finance

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Congrats! You graduated college and accepted your first full-time position. The transition from college life to “the real world” can be quite challenging and, at times, confusing. However, right before you rush through that HR paperwork, realize that those forms might hold the magic key to retirement savings.

I’m referring to your first 401(k) plan. Even though retirement seems like the last thing a new college grad should be thinking about, your commitment to your future self – we call that individual the Future You — starts now. By enrolling in your new employer’s 401(k) right off the bat, you are taking a giant step toward complete financial independence.

You might be done with classes, but don’t give up on learning just yet, especially when the subject is your future! Check out this 401(k) 101:

 

  1. Look Into Your Enrollment Options.

Despite when your first day of work was, your enrollment period might not begin for another few months or even a whole year. Every company operates on a different enrollment schedule.

If you can’t enroll immediately, check with HR on when you will become eligible. Set a reminder on your calendar to revisit the open enrollment discussion when it gets closer to that period.

Why? Letting this slip off your radar will cause you to miss out on a tax break and compound interest (more about this below) — which is like flushing money down the toilet!

 

  1. Find a Happy Medium in Your Involvement.

When it comes to your money, no questions should be off-limits, especially if you are new to your employer’s 401(k) plan. Take advantage of your plan provider’s representatives who are there to advise you on the nuances of your plan, investment choices and company match options during the open enrollment period.

 

  1. Don’t Discount the Power of Compound Interest.

As you may have learned in your college economics class, those who begin saving earlier will wind up with more cash. This concept is called compound interest. Think about it this way: The earlier you save, the more vacations you will be able to go on in retirement (hello, world traveler)! It might seem like those first few dollars you save are entering a black hole, but your assets, or shall I say “vacation fund,” will build over time.

 

  1. Don’t Give up so Easily.

Some companies unfortunately don’t have a way for you to save for retirement at work. While that’s a huge bummer, there are still options for you. Don’t shrug your shoulders and give up on your future – there are viable, easy solutions!

Turning to your local bank to begin an individual retirement account (IRA) is likely your best bet. In an IRA, you still have the ability to invest pre-tax dollars. Not only do you give yourself the opportunity to save, but your bank may also be more likely to loan you money in the future because you are establishing positive financial habits from the get-go.

Hopefully you have a better idea of how to go about enrolling in and taking advantage of your first retirement plan. You not only passed college, but you just aced 401(k) 101. Way to go, smarty-pants!