I will retire rich. It’s a goal and a pursuit to enjoy living.
Retiring rich would give me peace of mind if my health deteriorates.
Retiring rich would give me the opportunity to pursue other interests and to keep living.
Rarely does a restaurant, unless it is a part of a larger hospitality group, offer retirement saving to its employees. However, you could start saving early by opening an IRA account with an online brokerage.
There are two types of IRA accounts: Traditional and Roth IRA. Both are great tools for saving for retirement. One is not better than the other, the mere difference is based on each individual’s preference in either paying tax now or later. (fund withdrawn from a retirement account is taxed as an income).
While a Traditional IRA lets you deduct your income in the annual tax return and defer tax payment, you are subject to pay income tax when you withdraw the money later.
In contrast, money that goes into ROTH IRA is post-tax. You are using part of your take-home paycheck to contribute to the retirement account. Therefore, money withdrawn later is not subject to income tax.
I opened a Roth IRA account with Wealthfront, a robo-advisor, and it invests my retirement saving in a personalized stock portfolio. My average return is 7%~10% annually. And my money compounds over time.
I choose to open a ROTH IRA because I am expecting to be in the higher tax bracket when I retire; therefore, by contributing to ROTH IRA, I will be able to withdraw my money without paying any tax.
Saving for retirement is the first step towards achieving financial freedom. Money saved and invested compounds over time. A 10-year gap of saving could be the difference of $500k in your bank when you retire.
Regarding to my personal stock portfolio, I let my robo-advisor, Wealthfront, invest for me according to my risk tolerance.
I am 36-year-old and single, and I have a decent job. Therefore, I lean towards on the riskier side of my investment. The risk tolerance is usually decided in relation to your age; the older you get, the less risky your investment should be, given you will have less years to work and make up any losses incurred in your investment.
Saving for retirement is a long game worth playing. Life is short, yet long enough for us to live and enjoy. While we toil our days away at work, the greatest reward at the end is to enjoy the wealth we build for retirement.