What types of retirement accounts can you contribute to?
The types of retirement accounts you will use to achieve Financial Independence depends on what is available to you. Are you in the military? If so, you have the Blended Retirement System (BRS). Are you in the corporate world? If so, you likely have a 401(k) option. If you are a teacher or self employed, you have other options.
There are different types of retirement accounts and we don’t have access to all of them, but most employees have the ability to initiate and contribute to a Traditional IRA and/or a Roth IRA.
It is important for us to determine what plans are available to us, discover how we can initiate them, and then take action in order to maximize their performance within our retirement planning.
In this Fiology lesson, we will discover much of what we need to know about retirement accounts.
Types of retirement accounts include:
- Roth IRA
- Traditional IRA
- SEP IRA, 401(k)
- Solo 401(k)
- SIMPLE IRA
- Thrift Savings Plan
- and more
It can be overwhelming. Once you determine what accounts are available to you, it’s recommended to focus on those, for now, to help avoid getting overwhelmed or confused. After spending some time learning about what you have available to you, take action. Know what you are invested in and how much you have invested in each account.
Investing in these accounts can have many advantages that can support your Financial Independence journey.
- Investment Fees Will Cost You Millions by Physician on Fire of physicianonfire.com. This is to make you aware of what to look for when you begin exploring your investment options and consider the true cost of selecting one investment over another.
- Choosing the Best Retirement Plans for You by Kailey Hagen of fool.com
- Best Retirement Plans: Choose the Right Plan for You by Dayana Yochim of nerdwallet.com
- Investing Can Be Simple by Joel of fi180.com
- Traditional IRA vs. Roth IRA – The Best Choice for Early Retirement by Brandon of madfientist.com
- HSA – The Ultimate Retirement Account by Brandon of madfientist.com
- Understanding Your 401(k) by Sean Mullaney of fitaxguy.com
- Order Of Operations | The Buckets | The Roth IRA by Brad Barrett and Jonathan Mendonsa of choosefi.com
- Health Savings Account Explained by Rachel Cruze of rachelcruze.com on YouTube
- Visit the ultimate authority of the Types of Retirement Plans at the IRS.gov website. Again, for now, only focus on those accounts that you have determined are available to you. While simply hearing the term “IRS” usually brings tension, their website is a great resource. Click on a few links during your visit.
- If you already contribute to your 401(k) at least up to the amount to receive the maximum matching contributions, consider opening a Roth IRA or a Traditional IRA with Vanguard. Do your own research on investment options. A recommendation depends on the amount of funds you have available when you initiate your account. If you have $1K to invest, consider a Target Retirement Fund or VTI. If you have $3K or more to invest, consider VTSAX. There are many comparable low-fee options offered by other fund companies. Please do your own research and invest only when you have educated yourself enough to be comfortable. If you have questions specific to your circumstance, please join the The Fiology Community Facebook Group and ask questions there. Each person’s situation is unique. Do not take the information on this page or the links associated as gospel or directive. Learn as much as you need to responsibly take positive action to achieve Financial Independence.
Note: If determining to invest between VTI or VTSAX, consider that you’ll have to manually make periodic purchases of VTI from within your Vanguard account. If you want to automate periodic purchases, then consider VTSAX. The underlying investments are nearly identical.
Depending on your chosen profession, you may have unique accounts available to you.
Types of Retirement Accounts for Military or Federal Employees
- Blended Retirement System Series by Airmen Mildollar of militarydollar.com
- Tricky Details Of The Military Blended Retirement System by Doug Nordman of the-military-guide.com
- Thrift Savings Plan (TSP) official website. There are many guides and calculators. TSP is available to the military and federal employees.
Retirement Accounts for Teachers, Nonprofit Employees, or a Ministers
- Understanding Your 403(b) Plan by Joshua Kennon of thebalance.com
- The Unfair (FI) Advantage Of Teachers | 457b by Millionaire Educator of choosefi.com
- 7 Reasons to Love Your 457 Plan by Millionaire Educator of millionaireeducator.com
Retirement Accounts for Self Employed
- Retirement Plans For The Self Employed: SEP IRA Vs. Solo 401(K) by ChooseFI of choosefi.com
“The scariest moment is always just before you start.” – Stephen King