Once you graduate from college and accept your first position, you may feel like you’re on top of the world. This exciting time in your life also causes you to face many new questions. Young adults frequently ask us about the best way to start saving for their future. Here are four important guidelines to follow:
- Take the match
Americans are leaving $24 billion in unclaimed 401(k) matches on the table. 
Who doesn’t love free stuff? A company 401(k) match is free money, so take advantage of it. This is your company incentivizing you to save for YOUR retirement. Before you ever think about opening any other kind of retirement account, make sure you take advantage of your company 401(k) match if they have one.
- Open a Roth IRA
If your company does not have a match or maybe your company does not even have a 401(k) set up, what should you do? If you make less than $137,000 per year ($203,000 if married and filing jointly) then open a Roth IRA. The reason for this is simple: tax free growth. Uncle Sam cannot touch this!
Fifty-five percent of Americans save for retirement with a regular savings account.  This is preposterous! Here’s why:
Let’s say that an individual begins saving for retirement at age 25 and places $5,000/year into a Roth IRA every year until they retire at 65, at an average annual return of 7% and a marginal tax rate of 25% the Roth IRA would be worth well over $1 million. Whereas, a regular taxable account would be worth just over $675,000. This is a HUGE difference because of taxes! We have got to quit leaving money on the table.
- The time to save money is when you have some
When you are making too much to contribute to a Roth and you do not have access to a 401(k) or you are taking advantage of your company’s match, maybe even maxing out your 401(k) and you still have some extra cash left over you would like to contribute toward your retirement. There is always the traditional IRA. You can contribute to a Traditional IRA no matter your income level and you can deduct your contributions to a Traditional IRA from your taxable income.
- Failing to plan is planning to fail
Forty-six percent of Americans are just guessing at how much money they need for retirement. 
This is like a teacher handing out a test and then proceeding to write all the answers on the board and half of the class never looks up to notice. Talk with a financial professional, walk through different scenarios and desires for what you want retirement to look like, and then plan to get there. Help yourself and eliminate the stress that will inevitably come if you choose to wait until your 40’s or 50’s to think about retirement.
Conner Combs serves as a wealth advisor for Archetype Wealth Partners in Dallas, Texas. Conner is an MBA graduate from East Texas Baptist University where he also played baseball and became only the second player in NCAA history to be named Academic All-American of the year twice. His passion at Archetype is to help others live in their purpose. Archetype exists to help families thrive across generations.
Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.
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