DeepSummary
The episode begins by discussing the various retirement account options available today, such as 401(k), Traditional IRA, and Roth IRA. Nicole Lapin explains the key features and pros and cons of each account to help listeners understand which one might be suitable for their goals.
Lapin advises that people will likely need a combination of different retirement accounts to have a comfortable retirement, rather than relying on just one option. She provides detailed information on how 401(k) plans work, including employer matching contributions, tax advantages, and penalties for early withdrawals.
The episode then delves into Traditional IRAs and Roth IRAs, comparing their tax treatments, contribution limits, and eligibility requirements. Lapin strongly recommends contributing to a Roth IRA if eligible, as it offers tax-free withdrawals in retirement and hedges against potential future tax rate increases.
Key Episodes Takeaways
- Individuals will likely need a combination of different retirement accounts, such as 401(k), Traditional IRA, and Roth IRA, to have a comfortable retirement.
- Contribute to a 401(k) plan if your employer offers matching contributions, as it's essentially free money.
- Consider the potential risks of having your retirement savings tied too closely to your employer's company through a 401(k) plan.
- Try to max out contributions to a Traditional IRA annually, as it can reduce your taxable income for the year.
- Contribute to a Roth IRA if eligible, as it offers tax-free withdrawals in retirement and hedges against potential future tax rate increases.
- If your income exceeds the Roth IRA limits, explore the legal loophole mentioned in the episode to potentially still contribute.
- Invest the money in your retirement accounts, as leaving it uninvested is equivalent to keeping it in a checking account.
- Self-employed individuals can consider opening a solo 401(k) plan to maximize retirement contributions.
Top Episodes Quotes
- “You're going to need more than one kind of retirement account in order to ball out in your senior citizen years.“ by Nicole Lapin
- “Maybe it's just me, but the basic idea of having your retirement and your job being so closely linked seems wrong.“ by Nicole Lapin
- “If you are given this option, you should absolutely put money into a Roth. Do not hesitate.“ by Nicole Lapin
- “The rule in 2024 is that you're eligible for a Roth IRA if you make less than $161,000 as a single person, or 240 grand for those married and filing jointly.“ by Nicole Lapin
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Episode Information
Money Rehab with Nicole Lapin
Money News Network
3/6/24
401k... IRA… alphabet soup… help? Nicole breaks down the difference between the darlings of the retirement world, and how to know which option is right for you.
Here's the info on the Robinhood boost Nicole mentioned: Robinhood has the only IRA that gives you a 3% boost on every dollar you contribute when you subscribe to Robinhood Gold. Terms and conditions apply. Learn more at Robinhood.com/boost
Here's the episode Nicole mentioned that explains the perfect legal loophole you can use to snag a Roth IRA