Right out of college many people are able to land their first full time job. For the lucky ones, they are able to get a job in their desired field. Starting that job is exciting and nerve wracking. The last thing on their mind is setting up a retirement fund. But for those who are young and have many years ahead of them before they retire, now is the time to set up that retirement. Some accounts are easier than others to set up, such as the 401(k). But others require a little more legwork on the part of the individual.
One of the biggest perks to starting a full time job is access to the many benefits those jobs offer. There are health insurance packages, life insurance benefits, paid time off, and retirement accounts. Most of these benefits allow the employee to be automatically enrolled, but some, like the 401(k) require them to fill out some additional paperwork. After the probationary period (up to six months or a year at some companies) signing up for the 401(k) is as easy as filling out a couple extra forms. The company should notify you when you are eligible, and then you just have to pick your funds, select your withholding, and you are set up. Choosing your investments, and selecting how much to withhold, is another topic completely.
If you do not have access to a 401(k), or have maxed it out, there are other options. Setting up an IRA is not any harder than setting up a 401(k), but it does take some motivation on the individual’s behalf. The first order of business is to find a trusted advisor. While it is possible to set up an IRA individually, there are professionals who deal with finances all day long, and they can help to explain some of the finer points of investing. These professionals will walk you through risk tolerance, selecting investments, doing the paperwork, setting up dollar cost averaging, and helping you set up a systematic contribution schedule. In essence, all you have to do is focus on making money, they will focus on helping you store that money away in a place that will grow and you can use it during your retirement.
Setting up a retirement fund is not a difficult thing to do. Most of the time your employer will take care of the majority of the work, and all you have to do is sign the forms. With the advent of Target Date Funds, even more of the work is take out of it. Even if you do not have access to a 401(k) the hardest part about setting up an individual retirement account (IRA) is making an appointment to go in and meet with a financial advisor. The advisor will then help you with the hard parts like choosing investments and dollar cost averaging. The important part is taking that hour or two to make sure your financial future is secure.