Video: Saving for Retirement

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This video serves as a basic introduction to common retirement savings products and is an excellent way to get the conversation started about long-term savings goals.

Video Transcript

GRANDMA: Yoo–hoo! Jennifer!

JEN: Grandma?

GRANDMA: How do you like my new wheels?

JEN: Ah, they look…

GRANDMA: Dope?

JEN: They look expensive. Grandma, I don't know how to say this, but…

GRANDMA: What? Out with it!

JEN: It's just that you're retired, shouldn't you be not spending a lot of money at this point in your life? 

GRANDMA: Oh, I see what's going on. You don't think I can afford this! Little do you know, I started saving for retirement when I was your age, and a little savings know-how can go a long way. The most popular options include IRAs, both Traditional and Roth, and then there's 401(k)s. They're basically containers for investments, OK? They grow your money tax-free for your retirement days. Now they all have different limits on your yearly contributions. This one's set up where you work, these at financial institutions. Some have taxes on withdrawals, some have tax-free distributions, and there's pros and cons for each. There is no obvious solution, but let's say you have limited funds. Here's a strategy, a map, a guide, a rule of thumb: crush any credit card debt, build an emergency fund. Then get ahead of the game by getting started while you're young. Step One:

JEN: What's so funny?

GRANDMA: If you have company match, it's basically free money. So Step One: put in enough to meet your match. Then move on to Step Two with the rest of your cash. I mean your Roth IRA: its withdrawals are tax-free, so you'll wanna top it up before you move to Step Three! If you have money left over, max out your Roth IRA. Then switch back to contributions to your 401(k).

JEN: Okay, I get it… But we are talking about my retirement here, and Grandma, that's like decades away. And, as for contributions to my Roth IRA or my 401(k), I've got bills to pay, my student loan and other stuff that's more important today. Can't I just do it later?

GRANDMA: Oh, you silly millennial, did you want to still be working when you reach your centennial?

JEN: Nope!

GRANDMA: Then you gotta attack it, financially back it, and track it. In fact, it affects your tax bracket. The accounts that you use will give you freedom to choose when you want to "Peace out, homies!" on a tropical cruise instead of singing the blues when you're seventy-two and still stuck in a rut and working, paying your dues—but if instead you'd rather be like me, you better take my advice because I'm the "OG." That stands for "Original Granny," sweetheart! Grandma out!

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