Retirement. Ugh. There’s that word again! Although it’s a bit of a buzz word, it is one big hairy monster that no one really wants to talk about. Why is that? I suppose the task of saving for retirement while managing life today is an overwhelmingly complex task. Not only do you have to sift through all the account options with varying levels of risk, you also have to become familiar with all the rules governing their establishment and operation (which are generally provided in booklets, not a half sheet of paper, by the way). It’s understandable why the experts require licensure to give advice.

The good news is the jargon can be simplified, and you can follow some general guidelines to get informed and start preparing yourself for a joy-filled retirement.

First, if you have an employer-sponsored plan, be an active participant. What does an active participant do? She knows and understands the benefits available to her through her employer; she takes advantage of match-incentives to maximize total contributions made to a retirement plan; and, she reads regular statements to ensure the investments selected match her comfort with risk.

Second, consider supplementing your employer plan with an individual retirement account (IRA). There are two options available—Traditional and Roth—each with a wealth of investment options. While these accounts are similar in many ways (like they are both designed to help save for retirement), there are a couple key differences that can help you identify which will work best for you.

The most notable difference between Traditional IRAs and Roth IRAs are the tax incentives. Generally, Traditional IRAs accept pre-tax contributions, while Roth IRAs accept after-tax contributions. A common guideline used to determine which account might be right for you is to use the IRA that will give you the best tax advantage. If, for example, you believe you are paying a higher rate of taxes today than you will in the future, making a contribution to a Traditional IRA will give you the advantage of a tax deduction today while also paying a lower tax rate when you distribute the funds during retirement. On the other hand, if you believe you are paying a lower rate in taxes today than in the future, making a contribution to a Roth IRA will give you the advantage of paying taxes today and taking tax-free distributions later.

Simply put, there is no need to be intimidated by the big hairy monster that is retirement planning. Find organizations that will help you wade through the material and come to the best decision with you, and don’t be afraid to ask questions. At Affinity Plus, we welcome that conversation, and we look forward to having it with you.