Coach Jean explains how 401(k) employer matches work and why you should capture that free money. Traditional accounts cut your taxes now, Roth accounts cut them later. This is step two in the financial playbook.
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Hello everyone and welcome back to the new retirement YouTube channel where we help you navigate the complexities of personal finance. I'm Coach Jean, a financial wellness coach here with New Retirement and today we're exploring a topic that can significantly impact your financial future. We're talking about employer sponsored retirement plans. The information in this video is meant to help you better understand how to prioritize your savings and investment vehicles. This is the second play within the playbook. If you haven't done so already, I would encourage you to watch the first and second videos in this series in which we cover the playbooks, methodologies and the importance of establishing an emergency fund. So first things first, let's understand the landscape so there are various types of employer sponsored retirement plans, each with unique features. The most common of These is a 401. A 401 is typically offered by a private company. These plans serve as vehicles to help you save for retirement in a tax advantaged manner. There are two types of 401 traditional and Roth. The key difference lies with when you pay taxes on the contributions and earnings. With the traditional you get tax deductions up front, but you pay taxes when you withdraw during retirement. In contrast, a Roth is funded with after tax dollars and qualified withdrawals are tax free. Now let's discuss one of the most compelling reasons to contribute to your 401 the Employer match. Many employers offer a matching contribution, meaning they'll match a percentage of your contribution up to a certain limit. This is essentially free money, so you don't want to leave it on the table. Capturing your employer match is step two within the playbook. So to recap, contributing to an employer sponsored retirement plan is an important aspect of of financial planning. It provides you with tax advantages, potential employer matches and the opportunity to secure a comfortable retirement. The beauty of New Retirement's financial planning software is that it can help you visualize your savings growth and gives you the added benefit of future tax modeling. If you found this information helpful, don't forget to like this video and subscribe to our channel for more financial insights. And hit the notification bell to stay updated. Thank you for joining me today. Be sure to watch the fourth video in this series where we discuss high interest debt repayment methods. Until then, take control, plan wisely and make the most of today.
