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Once you start working, ask about the company’s 401(k) plan and when you’re eligible to make contributions. Some plans even allow part-time workers to participate in the company’s 401(k). You should sign up as soon as you’re eligible, even if you don’t expect to work there too long. Make some contribution, even if it’s only one or two percent. If possible, try to contribute the maximum amount that your employer will match.
The Pension Protection Act permits companies to enroll employees automatically in their 401(k) plans, but you may choose not to participate. In the long run, however, that choice will cost you a great deal of money. If you invest $300 per month from age 25 to 59 at 5 percent, your account will grow to $320,734. If you begin at age 30, it will grow to $234,021.
IRAs can be set up directly with:
- A bank
- A brokerage firm
- A mutual fund company
You can handle the paperwork online, by phone, or in person. Many financial institutions permit you to make your IRA contribution in small chunks. You can arrange for your contribution to be deducted automatically each month from your savings or checking account.
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