How IRAs Work And Why They Are More Popular Than 401(k)s
ฝัง
- เผยแพร่เมื่อ 11 ส.ค. 2021
- Choosing the right retirement account that best suits your needs is a vital step in making sure you are well prepared for retirement. So what is the real difference between a 401(k), an IRA and HSA? And how do you know which one is right for you? Watch the video to find out.
When people think of retirement savings, plans like 401(k)s and IRAs probably come to mind. But there are other unexpected ways to save for retirement, such as health savings account, or HSAs.
“I don’t think they were designed to be a retirement account,” said Angie Chen, assistant director of savings research at the Center for Retirement Research. “I’m just as puzzled in terms of why HSA has become another option for a retirement account.”
First introduced in 2003, HSAs were originally created to incentivize saving for medical expenses for those in a high deductible plan.
“The idea is that you can put money pre-tax into the HSA and set that aside so in the event that you need to spend money on your health care that would not be covered by your insurance plan,” Chen said.
While money in an HSA can also be used for investment, most HSA holders use the funds for its original purpose of covering medical expenses. In 2019, just 7% of health saving accounts had investments other than cash.
“I think folks miss the investment component and that is a major deal in being able to provide for healthcare expenses,” Odyssey Capital Advisors chief investment officer Jason Snipe said.
» Subscribe to CNBC: cnb.cx/SubscribeCNBC
» Subscribe to CNBC TV: cnb.cx/SubscribeCNBCtelevision
» Subscribe to CNBC Classic: cnb.cx/SubscribeCNBCclassic
About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news: www.cnbc.com/
Follow CNBC on LinkedIn: cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: cnb.cx/LikeCNBC
Follow CNBC News on Twitter: cnb.cx/FollowCNBC
Follow CNBC News on Instagram: cnb.cx/InstagramCNBC
Subscribe to CNBC PRO: cnb.cx/2NLi9AN
#CNBC
How IRAs Work And Why They Are More Popular Than 401(k)s
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 5 million dollars
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Sonya lee Mitchell is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I searched her full name online and found her webpage. I emailed to make an appointment to talk with her; hopefully, she gets back to me.
Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing! Somehow this video has helped shed light on some things but I'm aiming to create a portfolio worth not less than $2m before I turn 60.
A solid strategy can be a key component of an investor’s portfolio. Well, the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.
@@DanLeahfort Yes true, I learnt that in 2020, when I lost almost everything. But I switched to using a financial advisor and I've been returning at least $98k every month so I’ve been sticking to investing via an Advisor.
There are a lot of independent advisors you might look into. But i work with *Theresa Maria Kost* , and she is excellent. You could check her out online and proceed with her if she satisfies your discretion. I endorse her.
Choosing a Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I had $3M million saved, and I won't be taxed on my withdrawals.
I certainly didn't achieve that on my own. My knowledge of finance was quite limited. A skilled financial advisor truly makes a significant difference.
Please who is the consultant that assists you with your investment and if you don't mind, how do I get in touch with them?
Definitely! Everything unfolded under 2 years following Stacey Lee Decker’s guidance. I began with just under $150,000 and now I'm only about $45,000 away from reaching a-million dollars.
I've personally invested my own money in Bridgestow, and I must say, their investment approach is both fair and rewarding. The returns have been impressive, and I appreciate the security they provide. Their track record and commitment to excellence make me confident in my investment. If you're looking for a reliable option, Bridgestow is certainly worth considering.
That sounds intriguing! I'm curious to know more about your experience with Bridgestow. How has your investment journey been so far? Any specific aspects that stood out to you? I'm considering options and would love to hear more about your firsthand experience.@@DanielAdolf
Explanatory video, one that folks really need to watch. I’m 50, retired a while at 45. I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts, in cumulative of over $1M. I receive income from my rental properties too. Zero debt and all is going accordingly. My financial consultant has been patient and has done a wonderful job for me throughout the years.
Living below ones means & investing before retirement especially can be difficult but it's necessary. I've made lots of money mistakes in the past but I don’t regret it as I've learnt from them. Now I’m just focusing on the s&p 500 and waiting for a few years.
The 401k is good, because retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k. My mom retired with about 4.2 million, but my dad retired with roughly 1.8 million. So it really does.
My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. Haha
@@harrietlancaster44 Please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
@@harrietlancaster44 Thank you for this information. I kinda have an existing portfolio I want to transfer, and I want to build a portfolio for my wife. Do you suppose she offers that service?
I want to diversify my portfolio across different stocks and sectors to minimize risk. I’ve heard of people accruing over $550k during recessions, how do I achieve this?
Remember that investing in the stock market carries risks, and it’s important to do your own research and consult with a financial advisor before making any investment decisions.
Please can you leave the info of your investment advisor here? I’m in dire need for one.
I just googled her name and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a call.
Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing!
Why I always advise people to make 401k and all these contingency plans, and never to forget the diversification principle, no matter how much you are making from a particular investment, make sure to diversify your investments so that when another is down, the other will be up. You can do so by getting an experienced specialist whose platform has diverse investment choices to choose from. By doing this, you give little room for regrets and perhaps gain more.
@@kathleenstoner.n7499 Great advice. Generally, diversification is a key factor in investing. Don't put all your eggs in one basket. Pragmatically, I have been into all of these for some time, though I won't say I have made or lost a fortune. Do you mind recommending a specialist whose platform has diverse investing choices? Quite rare! I anticipate your response.
@@patriciacleveland2588 Funny enough, I can honestly relate. I don't know if I am permitted to drop this here, but do run a check on Sandra Yvonne Webster or Sandra .Y. Webster Finance. Was in the news alot in 2020.
@@kathleenstoner.n7499 Too bad most people don't follow the diversification principle, the reason why they easily get tense when there is volatility.
you can have more than one ira
I’m 38 and I have about ($190k) liquid in savings which I plan to put towards becoming a homeowner, but based on the current high prices on real estate, do you suggest I hold from buying and look at stocks instead?
Yes, a housing crash is happening. If you're thinking about investments to earn huge income while maintaining the ability to access your money and safety, so you don't get caught in a market decline, a financial planner can come in handy
I completely agree; I am 60 years old, recently retired, and have approximately $650k in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
Mind if I ask you to recommend this particular manager?
Don't be hesitant to contact Sonya Lee Mitchell and follow her directions.
I'm pleased with the advisor's prompt and knowledgeable assistance. Her professionalism instills confidence. Looking forward to further discussions.
We experienced the peak of our era, and now it is gone. Recession is tanking everything including 401K. My retirement equities portfolio of $750K is in the reds. I keep losing because of inflation. This world will fall to the corrupt rulers in the same way that Rome did. I'm sorry if you're thinking about retiring and you're worried that your pension won't be enough to meet the rising cost of living. Horrible foreign policies everywhere, bad regulatory policy, bad fiscal policy, and bad energy policy.
For retirees and those close to retirement, I believe it's particularly challenging. All those years of labor only to lose it all to a problem you weren't responsible for, my regrets to everyone retiring during this time.
I'm very worried about the future and where we're all heading, especially in terms of money and how to get by. I'm considering making my first investment in the stock market, but how can I do so given that the market has been in a mess for the majority of the year?
I agree, that's the more reason I prefer my day to day invt decisions being guided by a init-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a init-coach for over 2years+ and I've netted over 2.8million.
That's fascinating. How can I contact your Asset-coach as my portfolio is dwindling?
When ‘Carol Vivian Constable’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.
When the stock market rebounds, many investors may come to regret not investing in the red today. It's possible that this pricing will never be seen again. If you have a fantastic vision for it, there is always opportunity in the midst of chaos
The 2008-09 crash saw markets fall, wiping out trillions of dollars around the world, but savvy investors recognized a once-in-a-lifetime buying power, with companies' stocks on the market at deep discounts. With markets recovering from the Great Recession, these investors realized tremendous gains from their assertive maneuvers. I'm no savvy-investor, but the one method I've relied on to gain rapidly during times like this is having an asset-coach guide me. It may sound cliche, but I've been able to pull off over $750k this year alone using just this single method.
@@MariusNatt How can I contact your Asset-coach as my portfolio is dwindling? That's fascinating.
@@AshtonGrace Credits to "Autumn Lynzi Smith" she has a web presence, so you can simply just search her.
@@MariusNatt i just looked up online and i found her page ... i also schedule a time to call her.
@@MariusNatt of course a lot of people are "savvy", just not in a position to actually take advantage of these benefits.
Earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to invest $400k on my stock portfolio. what’s the best way to take advantage of the market?
Find st0cks with market-beating yields and shares that at least keep pace with the market long term. For a successful long-term strategy you have to seek guidance from a financial advis0r.
Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly and I made over $800K within a short time
My advisor's name is *Sharon Louise Count* and she has years of experience in the financial market. You can simply search her name on the web
good job CNBC for taking steps to educate the public on retirement
I disagree.....yes take advantage of 401K and IRA, but also look into ETF, real estate, and purchasing of other physical assets that increase in value! DO NOT depend on your job for your financial future! With inflation occuring overtime of several decades your money will decrease in value!
So let's say you max out 401k every for 20-30 years which is 19,400 and that's 582,000 USD in your lifestyle! Things natural increase in price because of inflation overtime so just because you will 582,000 USD when you retire doesn't mean it will have the same value of today then it will have you retire!
That's the trap everyone falls for! Work as a slave your whole life and come to find out you do not have enough to retire or live comfortably!
@@samuelthompson8080 what do you do with your 401ks? That money typically is invested and not just sitting around collecting some miniscule interest
@@qizhang5749 I am waiting for housing market to crash to buy a duplex, leverage it buy another rental, I own some crytocurrency! I save about 20% of check in put into ETFs!
@@samuelthompson8080 oh man that might take a while. I keep hearing that it'll happen soon in china though. I just like the employer contributions from 401k thats free money
Get both if you can. No reason one can’t have an IRA in addition to their 401k. You don’t have to put in the max if you can’t. Put as much as you can, trust me you will be glad you did.
What’s the difference between a Roth IRA and a 401k??
@@H2Ojellyfish 401k is pre-tax, and you pay taxes when you take out the money down the line versus right now. Roth IRAs are post tax, so you deposit money in after you paid taxes on it (think after you get your paycheck), and at retirement you don't pay taxes so all the growth was tax-free.
Problem is IRAs & 401k are at high Risk since they are in stock market! There is better ways to invest your money in a tax shelter vehicle than this, props to this channel for getting some information out there however this is not all good
Some employers offer a roth 401k. Pretty sweet as there are no income limits and you can put in a fair bit more than a Roth ira, they also aren't subject to "highly compensated employee" regulations. Know your financial vehicles and invest for the entire trip through retirement. Save early and save often. You will be fine 🙂
@@audimaga4504 What are those better alternatives to IRAs and 401(K)s?
I'm about to graduate college and go out into the professional world. This information will definitely come in handy!
Always do the max contribution for your 401 and HSA, assuming you’re single and have no dependents
Problem is IRAs & 401k are at high Risk since they are in stock market! There is better ways to invest your money in a tax shelter vehicle than this, props to this channel for getting some information out there however this is not all good
@@audimaga4504 no, if you're young, then take on risky assets for ultimate benefit. Be smart with your investment choices and reap the benefits.
I love my HSA. I have it on top of my 401K and only keep enough cash to cover my maximum out of pocket expenses, the rest is invested and I've made a ton within a year just investing in same blue chip companies and broad ETFs. Starting now in my 20s I hope that by retirement I'll have enough to cover every type of medical expense including premium in-home care if I ever need it. Start early my friends with every tool you got!
Smart man! Folks can also defer withdrawal for medical expenses as long as they want. I.e., pay cash for a medical procedure, let the HSA money keep growing, and claim the original expense years later (tax free) to, for example, pay for a vacation. Just be sure to keep ALL those medical receipts as proof of the original, qualified expense!
If it would just let you pay for direct primary care, it would be perfect...
Stay the course but don’t freak out when the market collapses. It’ll come back. You’re young and have time on your side.
I wish the HSA route would have been available years ago. Now I'm kinda stuck on the HMO. My advice is that if you are young and healthy, go for the HSA.
Weird. Why wouldn't you max out your HSA? (After maxing the employer matched part of 401k and maxing Roth IRA, of course.) Live on beans and rice today, to live much nicer in the future.
IRA & Roths are particularly advantageous for younger individuals, allowing for reduced taxes on income in the early stages of one's career. HSAs become especially beneficial if you're currently dealing with high medical expenses. Personally, I, plan to increase my investment in HSA as I age, prioritizing it for health-related needs. Right after college, David Marvin Willis a legal advisor helped prioritized establishing a 401K, which I later transferred to an IRA upon leaving that employer. While losing employer contributions stings, the current economic landscape doesn't always favor long-term employment stability.
It is recommended to save at least 15% of your income in a 401k account. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 15% of your income in a 401(k) account can help ensure you have enough money to retire comfortably. By saving this much, you can benefit from compound interest and potentially increase your retirement savings over time. I don't think I could retire with less than $3 million in income-producing investments, and I'm not talking about a 401k, but maybe at least $2 million. I plan to work until I'm at least 50. I have already achieved 60% of my goal.
Everyone needs to hear this, you need to create your own process, manage risk and stick to the plan, thick or thin, while continually learning from mistakes and improving.
Exactly, that’s all you need: “A good process”. I turned to a fiduciary financial advisor when I needed a good boost to help my business stay afloat. So I looked for financial advisors and came across someone with due diligence who really helped me increase my reserve from $75,000 to about $850,000 so far despite inflation.
I'm glad I came across this discussion. If you don't mind, could you tell me how I can contact the financial advisor who helps you with your investments?
The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Carol Vivian Constable‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
I'm 48,retired a net-worth of $2 million and currently travelling the world with my partner.I've loved the FIRE movement,planned for it and I did it!Anyone can do that too,perhaps with accurate financial planning 🔥
Whats fire movement?
@@angelinajames239 FIRE means - Financially Independence and Retirement Early...
It's a movement that guides people on a favourable early retirement.
@Bur GA Thanks for the response,I'll do more research and read up about this.
@@henryjason3044 These are the t ips that helped me
1.Plan towards it
2. Save money towards retirement (Roth IRA/401k)
3. Be frugal on spending(Don't spend on what you don't need)
4. Grow a solid investment.
I made alot from 3 (Investment) it is very important to financial independence.
People haven't seem to understand that depending on one stream of i n come had never made any m i llionaire::/ and earning che c ks don't put you on forbes.
Always check the expense ratio of the funds your employers offer.
Yep, pretty insulting that my employer's S&P 500 fund has an expense ratio of ~.35% .... insanely expensive considering there's probably at least a dozen funds 5 times cheaper than that
@@OneNewHope i would provide feedback to the plan provider or to HR. I would still invest in it though. Good luck!
@@OneNewHope 35 basis points isn't all that bad, definitely not insulting.
@@southrichmondtofl It's pretty terrible. VOO is .03%, or ten times cheaper. I would only choose a fund with that kind of expense ratio if it was a "specialty fund" and relatively unique.
@@OneNewHope mine does .75 on freaking SPY!
I went with the Roth 401k & HSA path with my employer.
My family came to America in 1799 from France. I am truly grateful and thankful that my family were all financially minded individuals and because of this we now live a much easier life as in terms of not needing to worry about money anymore. This still dose not prevent us from continuing the management of it, for the up and coming generations of my family. We simply repeat the cycle over and over again to insure a financially stable future for generations to come.
You really need to start your accounts as early as possible since the time element is crucial in developing that retirement nest egg. I got started saving late in the game and have committed to saving 34% of my gross income to have any hope of an adequate retirement.
Currently, I contribute to my 401K to get the employer match. I max out my HSA and have it invested. I next opened a ROTH IRA and max that out as well. That pretty much maxes out my ability to save as I only earn so much. As I am able, I'll toss a bit into a ROTH 401K.
What doesn't get mentioned is the advantage of having a paid off house. For those who assume they can just pay it off with their retirement savings, watch out! Unless it is coming form a ROTH account, you'll get nailed in income taxes from withdrawing such a huge sum!
I can't stress enough the importance of HSA in planning retirement and trifecta tax advantages it offers. I am baffled as to why so many employers do not offer this option.
My employer does not offer it, and I am going to see if they will.
Isn’t HSA use it or loose it within that year?
@@beowulf555 no, that’s FSA. Very different. Some employers actually allow both an FSA and an HSA. For instance you might have expected dental expense because you need lots of work, you might be able to get an FSA account on top of your HSA.
@@beowulf555 that’s FSA
My question is I have Roth 401k account, which the limit is 19,500. I figured instead of splitting my accounts I just bumped up my contribution a few percentages of what I would’ve paid anyway into a HSA. I can always pull principal, and worst case I can always borrow against it. Is there a reason outside of this to open an HSA? Only one I can think of is if I hit my $19,500 limits I can contribute above and beyond into a HSA. Which I don’t ever reach the 19.5k limit.
Why not use both?
One generally has a match
And the other you can actually invest in good things, like an investment home.
Great video w awesome content 👍🏽
Amazing video thank you
Great and informative video
In 99% of cases they are going to be around the same. A 401k will allow you to invest more.
Assuming you've already matched 100% of what your employer will match in a 401k ("free" money), then yes IRAs are better. You can have a self directed IRA. You can't have a self directed 401k. (Assuming you aren't your own boss.)
HSAs were made popular by those interested in the FIRE movement who want to retire early and want to have tax-free money that can be used for healthcare costs.
So nice to have this information laid out so simply
Increase wage for us workers, we suffer in a super high inflation!!
I do a roth 401k with my employer because i don't see how taxes will be cheaper in the future.
Roth 401k is the best option. It is nice to not worry about taxes in the future, and when you finally roll over your Roth 401k into a Roth IRA when you leave your job, you don't want a conversion tax bill to ruin your day.
@@fitybux4664 I have a traditional 401k at work.. I need to figure out how I can switch it over to the roth 401k
Why Roth 401k better than traditional 401k
@@tienzomby93 because its putting after tax income you earn now versus paying taxes in the future. Which with the way the US is looking is to increase taxes in the future to pay off debt. So when you retire with a traditional 401k you risk getting taxed at a higher rate. Plus its nice to know how much i really have in my 401k versus what i might have after i get taxed at whatever rate i retire at.
@@fitybux4664 It can be a double edge sword. Obviously no tax at time of extraction is best but if you are putting untaxed income (more money) into your account it could be just as fruitful.
You have the same options with a 401k if it's self directed. Fidelity Brokeragelink for instance. You have access to the entire market in your 401k
Besides IRA and 401k, are there other ways we can prepare ahead of time for our retirement? Mine draws nearer by the day and I'm gradually going into panic mode
There's no need to panic. Best way is to save more and invest those savings in profitable ventures (you must either be very informed or get the services of a professional so you don't end up losing your savings). I made my first million this year only through something as casual as Stocks and with less than 5 years left to retire, I don't have much to fear. Goodluck!
@@dr.karidouglas1312 ...Very sound and realistic... You mentioned investing and using
pros, if its not a problem. do you mind telling if you used one or recommending a good one? I could definitely use external help right now... I look forward to you
replying...
youll get through it. stressing wont help
@@stayhappy1161 Funny enough, I can honestly relate. Yes, I used one, I literally know next to nothing on the subject. For the professional, I don't know if I am permitted to go into details here, but you could
look up "Stephen Joseph Kohlhofer". Not so sure he takes on new people right now, but you could try.
@@dr.karidouglas1312 casually strolled into this thread and boom, I know this smallish man. Once attended a fundraiser he was also in attendance here in Vancouver,, Great speaker with a funny accent,, He's in the States though, I
doubt he works with non residents,,,
ABLE accounts are also a type of account that can function as a second place to put retirement savings, but they're only for disabled people, and their primary function is actually to allow us to have a bit of extra savings(up to $100k, not that most of us can realistically get that much) without compromising medicaid, SNAP, etc. eligibility.
The younger you are when you start your HSA, the more likely you are to have a stress free retirement. Don’t ignore the HSA. It’s worth it! Even if you have expected surgery or minor chronic condition, it is likely still worth it.
@@PaulGoins I think you are correct. The other trick is that, if you can afford it, to just pay your healthcare expenses but keep your recipes. From what I understand, there is no limit on when you can submit your eligible healthcare expenses. So you can be 70 and take out the money tax free for what you have receipts.
@@PaulGoins Hi Paul, maybe I am wrong, but this is my understanding. If I have $10,000 in my HSA, with a receipt for $10,000 surgery, I could hold on to that receipt and allow my $10,000 in my HSA to grow. Let’s say in 20 years the $10,000 is now $19,000. I can now turn in that receipt and remove my $10,000 tax free, and still have $9,000 in my HSA for future expenses. I will also read your reply on Mad Fientist’s to see if there is something I’m missing. Thanks Paul. There are no rules so we are all reading btw the lines here.
@@PaulGoins I thought they gains are also tax free with HSA.
@@hb2998 I always keep my recipes. (Receipts? Heh.)
@@hb2998 Also, you are correct about the funds growing larger if you don't rob the piggy bank early. They don't grow once you reconcile the medical expenses. I'd stop contributing to the HSA after medicare kicks in (usually age 65), but if I had an available balance, I'd keep racking up expenses. (Medicare premiums (yes you have to pay for medicare) counts as an expense against HSAs.) Depending on your life expectancy at that point, I'd start drawing out amounts in the hopes of 100% withdrawal by the age you expect to live until.
In the video they claim IRAs were made to accommodate those that had no access to 401ks yet a quick Google search says that IRAs were created 4 years before 401ks...
Yea, so for those 4 years people didn't have access to 401k. They are right.
They actually stated that IRAs were meant for those without a pension initially.
@@calvin2042 Hahaha you cad, I was about to comment the same thing :P
Do both RothIRA and 401K if you can afford it.
I want to do them both, now I just need to afford it.
Can you still do both even if you don’t get paid alot like say 60K or less annually. Isn’t diversity better right so having both is good?
@@johnmeraz7348 ask your wallet
bro i opened a roth with schwab over a year ago, contributed 3500, and never realized that i was supposed to choose where to invest it.
Cash is an investment of sorts. (Although not a very good one, inflation will eat you alive.)
Maybe something that is always needed and pays dividends
This reminds me of a story Ramit shared in his book I Will Teach to be Rich about his friend contributing for years and not actually choosing/investing the money. It must be a common thing that ppl do.
What do you mean by “where to invest it”? I’m new to this IRA thing
@@H2Ojellyfish I had to select the ETFs, stocks, or mutual funds to invest in.
I’m 32,
I contribute 10% traditional 401k and 3% Roth 401k… currently have $92k 😋😃.
Good job
@@cheeses_fries thanks
The fact that our Lord Jesus Christ blessed you with that money shows how much He loves you! Great job and keep up the great work!
If your 35 and younger… honestly you should have both … we aint gone have social securities
I have both and a brokerage account.
@@jherc12990 me too! And real estate too is a good way! I mean you have to live somewhere so pay a mortgage instead of rent.
Why because you’ll vote for the candidate that promises to use it for some corporate socialist welfare instead?
@@Graeberwave nope dont matter … Pay taxes but u cant say where any of its going … dont depend on any government for anything all are bad none better than the next
Honestly, I wouldn't do both as that's Boomer mentality (save and not have fun). Have fun traveling and partying when you're young, and save some of the rest for retirement (I recommend when you're in your late 30's or 40's). I know many people who did this, an dthey had a really fullfilling life!
it's a sick game but you learn to play or stay poor for life. I hate that companies only provide 401k in stock markets that crash every 5-10-15 years. This just steals so much of hardworking peoples life savings and it's disgusting. I hate it but you either understand the machine or you are just numb to it when it happens.
You are right. I personally own tech ETFs , S&P 500 ETF VOO, it's cheaper than SPY and has the same portfolio, many diversified single stock positions a mix of solid proven companies and companies with growth potential diversified across different industries, I frequently add to positions.
i started investing most of my stocks, the funds i earned in my 9-5 back into stocks i traded my way to a $400,000 stock portfolio and invested into TESLA 2 years later
I'll buy these right away cos I made good profit from your TESLA recommendation. However, I've been reading about investors making up to $50,000 monthly profit. if anyone knows, I'd really love to know how to make such profit despite the market odds
no time is ever too late to start buying and grow a very strong portfolio ahead of the major bull market. My best advice is to get a service from a professional trader to guide and help you make good decisions and profits out of your investing
@@albertbrian6448 I normally trade with Karen Lynn Olsen’s concept. All I do I mirror her trades and make some gains from the process.with a 10% commission for her good works
ALWAYS max out ROTH IRA first because you can withdraw your contribution any time in case of emergency without any penalty!!
This is wrong for a couple reasons. You can take out your principle, but you can’t add it back after the tax year ends. You can’t take out any profits without a penalty. Also not sure if it was mentioned, but you can take out 10k tax free if for a first home.
Also if a company matches, take up the match first, then Roth IRA. A lot of companies offer a Roth 401k so see if that’s an option. If you leave the company you transfer the Roth 401k to Roth IRA.
Don't withdrawal at all. Borrow against it. A loan isn't considered income.
@@KhanJoltrane could you explain why you would have to transfer the Roth 401k to a Roth IRA??
How hard can it be just, you want to safe whatever amount of your income and you're allowed to take it out when you reach a retirement age. If you want to pause your contribution you're allowed and allow for competition for people who like to try different holding companies. Hell let me choose to risk it all in just one or spread it. Holding companies can choose minimums etc.
I wish IRA limits were higher. $6,000 vs $19,500 is a huge difference.
All good stuff to help people. Surprisingly complex for laypeople to get confused about
Thankfully no one was confused from this informative video!
Do both! Always do at least employer match. 401k + backdoor Roth IRA = peace of mind
Roth 401k
Retirement plan : marry a rich woman
Better yet, don't marry a broke woman no matter how hot she looks.
Why not? My husband did. 😂
Then divorced her.
This made me so confused. My retirement is officially a bullet to the head.
Thank you
I did a work 401k no employer match I got a 15% of my gross profit sharing and I also had a Roth IRA after taxes.
If I'm 62 work until 65-67, is there any hope for me?
I want to be Peter Thiel and have a Roth IRA with $3 billion in it. Which, may I add, is non-taxable.
You won't
Let a few more Thiels happen, guaranteed Unlce Sam will figure a way to tax Roth accounts.
Ez. Start a company that you know will 10000x and put your founders shares in your roth ira when they're still $0.001 per share.
he had access to private equity because he was a paypal co-founder, so it’s unlikely very many are gonna be able to do the same.
@@stephanemujomba5148 yeah I was being a bit sarcastic. Def not a position not many people have access to
Still do not understand why there’s a different contribution limit for IRAs and 401ks?
They don't tell your when you hit 59 and a half you can use HSA funds for whatever you want just like a regular retirement account and it doesn't matter whether or not it's a health expenditure or not
After age 65, no withdrawal penalty (usually 20% ouch), but you still have to pay taxes unless it was for a qualifying medical expense.
I can totally see that loop hole get sealed by congress
yup
You lose the tax benefit.
@@tiberianexcalibur it’s not a loop hole. He’s just disregarding losing the tax benefit.
Roth earlier in life when you're in lower tax brackets. Traditional as your pay increases, more taxes and the deferral makes more sense.
With a 401k you can max out your pre-tax then keep adding post tax money if I'm not mistaken. Up to 56k if you're a heavy saver and make that kind of cash. You can roll over your post tax contributions immediately into a Roth IRA to bypass the "small" IRA limits. It's how the upper middle class and ultra wealthy develop huge IRAs that are supposedly capped contributions at 6k... hahaha yeah right.
I converted most of my traditional IRA's into Roth IRAs way back when and paid the taxes. I bought stocks and more than 20 years later the value went up by 20 times and it is all tax free.
@@howellwong11 what stocks do u recommend? That's the hard part for me.
@@howellwong11 don't withdrawal at all. You can take out a loan against it in the future. Loans are not considered income.
@@hogatiwash7750 If I knew what stocks to buy, I would be a billionaire. I worked in high tech so I was partial to it. i retired 21 years ago.
@@shanewillbur1325 There area lot of variables and unknowns, so you have tread carefully.
We want our pensions back !
How much did they pay and when did pensions not become a thing?
@@H2Ojellyfish when neoliberal economics became the thing starting between Carter and Reagan, ALL THE WAY to now.
You can not beat apension. You ould have all 3 back in the day. Pension, 401k and social security. Stay in one company for 40 years. Those days are gone
Depends. For high income earners, $140k+per year for single adults, a 401k with Vanguard/Fidelity/Schwab are great.
For those those singles earning $123k or less, the Roth IRA is far better. Also 401k plans that aren't with Vanguard/Fidelity/Schwab, just use a Traditional IRA for high income earners.
Is that gross or net income?
@@tshirtJeans Gross income.
Why? Is it because of taxes?
@@edwingarcia3250 Yes and Roth IRA eligibility for 2021. It got pushed up to $129k of earned income for 2022 Roth IRA eligibility max.
@@akin242002 so let’s say I plan on having two jobs. 1 making 115k a year and 1 making 90k in the next 5 maxing out Roth 457, 401k that my job offers
Have an individual (self-employed) 401(k) which allows complete control (no employees and can invest directly in equities, ETFs, etc. without plan or trading fees), a 401(k) from my other employer, a traditional IRA and a Roth IRA. The traditional IRA is for making backdoor Roth IRA contributions only. Wife has a 403(b), a 401(k) from a former employer (no fees), a traditional IRA (for backdoor Roth IRA contributions only) and her own Roth IRA. No HSAs here due to our good healthcare plans. In 4 years or so we will roll her 403(b) and 401(k) into her traditional IRA and eventually into her Roth IRA if it then makes sense to do so. Same time frame should see me rollover my employer 401(k) into my solo 401(k) or IRA depending upon what makes the most sense at that time. Will look at converting to Roth, in whole or in part, if and as it makes sense to do so.
17 with 5k invested in stocks for my retirement. Using a custodial account. Start young to maximize gains
Awesome job! Keep up the hard work and I believe you will become a multi millionaire in the future! 🙏
Nice. Wish I started investing at your age
You are on the right track. I wish I had known about Roth IRA’s and compounding when I was 17 and working at McDonalds. How a little bit of money undisturbed snowballs into a fortune with just time. A one-time contribution of $6,000 in a Roth IRA -- with no additional contributions at all -- would grow to about $200,000 in 60 years (assuming a 6% investment return and monthly compounding).
I bet you're jealous of 10 year olds who put every dime into retirement that they got from mowing lawns. Everyone always has someone else to be jealous of. ;-)
@@q-chan4764 Don't forget that Roth IRA only came out in the 90s, so maybe it wasn't even available back then? :-D
Another advantage of IRA is high frequency trading because no tax on cap gains. You can enter and exit investments at much higher frequency, like doing day trading, without the tax risks of going through your brokerage account.
Could you maybe explain what “high frequency” means?
Is this for a traditional or Roth IRA
I guess we should.be doing both?
How about remove the cap on contributions? That would be awesome.
Pfffff then no high income person will pay any tax.
i have both
Why are there contribution limits to begin with anyway?
I read that after 65, anything in an HSA doesn’t have to be used for just a qualified medical expense.
Because jobs dont offer retirement plans as much as they used to
I work for the state and have really good insurance. So... I can’t get the HSA but I have the FSA. My job offers a pension but I’m trying to learn about IRAs. I don’t wanna be 80 and still trying to work
Stick with the job and get an Roth IRA . HOPEFULLY you can make it to the year mark where you'll be eligible for a pension (most places require 20 years - if they don't fire you) and you can retire from the company early (lets say 45 years old). That income can then count as passive income. You can get another job if you want to stay busy. Meanwhile your Roth IRA will still be growing and you can contribute money from your pension to that. When you hit retirement age you'll have more than enough to not have to work once you're 80.
HSA started being used this way because: 1. Taxes are so high in some stated vs people’s earning capacity 2. The healthcare system of the US is borderline a scam. 3. Some people are very smart and resourceful and discovering HSAs as a triple tax advantage is only a matter of time
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can one take advantage of compound interest and potentially grow your retirement savings/net-worth to about $3M over time?
I am 40 years old. I rolled over a traditional 401K from a previous employer to by current employer. I am now doing the Roth 401k. Would it make any sense for me to open a Roth Ira now , to get the five year rule out of the way? Even though I am not planning to retire until I am 70? Thanks
Yes, open the Roth IRA ASAP. Max it out each year, then consider the benefits of investing in an HSA and then a taxable brokerage account (see the long term capital gains rates).
If it’s important to understand the different options for retirement plans, why isn’t this topic taught in middle or high school?
What if you get a pension that pays 75% do you still contribute to and max out a 457b plan or Roth IRA?
General rule is max out ROTH IRA after at least matching 457b. Then what is left over increase your 457b. Instead of increasing 457b I will be saving to buy rental property. So depends on your investment choice.
@@kraven4027
Thanks for the response, I don’t get a match on the 457b but I have been maximizing the Roth IRA for a few years now.
@@kraven4027 Not everyone is good at rental property investment. Some people do better with boring index funds. (Unless you a real estate investment person.) I would never tell my grandma to run out and learn rental property investing. (Unless she was into it.)
@@fitybux4664 Of course. That's why it depends on the persons investment choice.
This clip is meant for people who have access to HSA. As I am currently working, I don’t qualify for all the retirement options listed in this video. The question asked in the title is NO given my current situation. HSA as the primary retirement account!!!! Who is the target audience for this piece of content…????
Weird. Nearly everyone in the US has access to an HSA qualifying insurance plan through ACA. Now if you have an employer sponsored insurance plan and that works out better for you, that's great. But technically, it's not that you didn't qualify, it's just that you're choosing a better option for you.
A set amount of retirement savings per year, say $15,000, should be tax FREE, not tax deferred.
Only fair IMO since the federal government has completely screwed us with the social security program.
$6000 a year is tax free in a Roth IRA... $3750 for an HSA if you are offered one as well. I'm more than happy with those along with my tax deferred 401k
Everybody’s favorite Uncle has to get his cut!
@@OneNewHope Nope, Roth IRA's are paid with after tax money. I'm saying that a set amount per year should be pre-tax and never be taxed, not even the growth.
HSA's are nice in that regard, triple tax advantage with them.
@@AkweliParker Every time money changes hands he wants his cut...
@@black4vcobra so true!
I’m more confused after this video
What's confusing?
401k is the only option for some because of income max out limits
You know, 20 years ago, I was 25 and started planning my retirement. At the time, with inflation included, I needed about $600,000 in net eggs to retire comfortably. Fast forward 20 years, guess what? The REAL inflation turned out to be a HECK OF A LOT MORE than 2, 3, even 4% annually. I now need a million dollars to retire, but I learned something...if you think you need X amount, DOUBLE it. The government is lying to you about inflation (printing money doesn't help).
Why on earth do you NEED I million? What you need is a budget and to live simple.
*Ukraine doesnt help inflation
Oil, wheat, fertilizer, sunflower oil mainly come from Ukraine and Russia. And those things are used in many things.
Everyone should be able to open a HSA. That way you could put some money away for future medical while you are still working.
It current,y needs a High a deductible Health plan and only that health plan. What you are thinking would probably need to be a new type of account. Probably with less generous terms.
Heath Saving Accounts principles disappear most of the time if not used within a fix time period. So they are not useful unless there is a persistent chronic health problems / cost. IRA can be a good tax shelter for the super rich .. especially the Roth IRA. but most States may tax a regular IRA but some state will not tax 401K ... you can move 401k money to another 401k or an IRA but once the money is in a IRA it cannot go back to a 401K.
HSA money don’t expire. You are reading it wrong.
401(k), IRA,and HSA. None of these compares to my retire fund. I can't wait to retire and get matching humvees. My beanie baby collection in the vault should be worth billions when I am ready to cash out.
Yep, that's now the Pokemon cards, NFT strategy
How about my Hummel collection? Must be worth billions right? Right?
IRA & Roths ar best for younger folx. Pay less taxes on income when younger. HSAs are best if you have high medical expenses currently. I'll probably invest more in my HSA as I get older for health purpose use. Straight out of college I made sure to set a 401K which I transferred to an IRA once leaving that employer. It hurts losing employer contributions, but this economy doesn't support long-term employees.
I haven't started earning and you guys are talking about retirement 🤣😟
As soon as you start earning, start saving. You you need it and you will not regret it.
If you barely have any income, it's the perfect time to push money into a Roth IRA. The IRS allows you to have a Roth IRA Saver's Credit if you have a low income.
Diversify your savings. Consider three form of investments long-term, mid term, and short-term.
@@fitybux4664 if you have low income, should you really contribute to a IRA?
@@ghost_D what do you mean by “diverse your saving”? If your contributions are in a IRA then it’s obviously long-term.
*i dont even have 401K or IRA. i took it all out into my Stock account so i can flip that money. i gain more in the Stock Market then i do in 401k.*
Sacrifice today to live for tomorrow
Cheers🥂
Maybe an unpopular opinion, and I'm saying this as a believer and as someone who has ROTH and Traditional IRA. But has anyone considered of taxing advantage of life insurance and it's tax-free advantages provided with tax codes that is available for the public
If they start taxing Roth IRA / Traditional IRA accounts unfairly, life insurance might be the way to go. But before that, no thanks.
When choosing between Roth IRA and IRA, its not clear cut. It depends on your belief of the future and your personal situation. Pre-Tax dollars being put into an IRA and compounding pre-tax is powerful, you'll end up with much more money at the end than in the Roth IRA, however the tax rate in the future is likely going to be higher, but what will your personal tax rate be during that time? That is the real question. If you have a high tax rate today and are going to do mostly minimum distributions where your personal income tax rate is low, maybe it make sense to skip the Roth.
Actually there is more evidence that Roth is better if you also plan to fund an HSA. Then you get both traditional and Roth account and can fund accordingly based on your situation.
@@markeasley6149 Would love to see that evidence.
If you borrow against it and never withdrawal then you don't have to worry about that. Loans are not considered income.
If you plan to make massive gains in your Roth IRA, having to NEVER pay taxes against those gains makes a LOT of sense. If your gains are average, then yes it's a close toss up.
You can have all of them. Start converting your 401k or T IRA when you are out of work, sabbatical years, retirement, etc. those would be your lowest tax years. Convert enough each of those years that you can handle with ready cash to pay for the tax.
Then let the Roth growth, but not so high else people write articles that so and so has zillions in their Roth…..somebody stop that guy!!!
HSA is a clear winner in investment. You can invest in stock or ETF directly unlike most 401K company packages. Plus, you can use the funds to make medical related payment anytime. EVERYONE will have to make some sort of medical payment so why not do it tax free? Plus, after retirement, the remaining funds can be use for anything.
Depends on the HSA manager. I had 2 that had limited funds like some 401k. Then I have one where you can full blown buy stocks, but they only have a limited selection of stocks. 1000s but not every stock. Just popular ones they think people will buy
@@chowsquid True. Put the funds in one that will allow you with more flexible fund is the key. Some will allow you to link it to a broker like TDAmeritrade, so you're pretty much open to buy with limited exception.
Who tf waiting till 59 to retire 😂 I’m tryna be done with this workin shxt by 40
The average person would rather party
I have a traditional 401k but my job also offer roth 401k.. I miss out on that.. If I wanted to swipe all my money into the roth 401k is that possible?
That's called a backdoor Roth conversion. Normally you would have to pay taxes when you do that since otherwise you'd be skipping out on taxes entirely. But rumor has it that can be done.
Then transfer over to the 401k Roth
What’s the difference between Roth IRAs and traditional IRAs
@@H2Ojellyfish to put it simple one is tax deductible and the other is not but on the bright side when you get to retirement there's no tax consequence
What if you die before retirement, do I get that money in the afterlife?
Whoever you put as your beneficiary.
I started investing my HSA money and feel super savvy. 😅
Okay. The title of this video is misleading. The title should have been "Are IRA's better than HSA's" because you barely expanded on 401k.
For example: you stated in an IRA you have to pay taxes when you finally decide to withdraw that money. Is that the same with 401K's? You said 401K's have lower fees. Do IRA's have higher fees? There are 4 types of IRA accounts. How many types of 401K are there if any?
Just became a millionaire this year at age 27. Thank you
They won't be be flying off the shelves in the UK I know that
Unable to put money in a IRA because my employer has 457 a. And you can’t use both.
What is preventing you from opening an IRA at ETRADE?
Nope it is because Employer cut off pension plan and only contribute if the employees match it…That is why they create 401k and 401B
Can create 401k plans. Not all employers have 401ks.
Well its simple why should i lose money in 402k cus ceos dont know how to run a buisness, when i can manage my own money in my safest funds. I went through 2 recessions n i got less in 402k with max matchings then my ira, n roth
for someone who goes to a few specialists is the HSA worth it?
Just add up your expenses on your current plan. Then apply that to HSA+HDHP and see if it works for you. If you’ll end up depleting your HSA contributions, then it’s not worth it unless you have other cash to put for current medical cost.
The big bonus for HSA+HDHP is you don’t use up your contributions and you let it grow.
Defined pensions were better than both.... let's keep convincing ourselves these are good when we used to have defined pensions that were better
Tell the coal miners that.
I agree. People with pensions don't have to do all this confusing stuff. At the end, we will get a good retirement!
@@mantisman5546 And Studebaker employees