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Retirement! A word that has so many different meanings. For some it means the end of one chapter and the beginning to a new and for others it means it’s time to live life for you. Retirement is one of those things that we often don’t think about until it’s here. How many 15 year olds can seriously say they’ve thought about retirement?

Stronger Person

As a millennial, retirement never crossed my mind until I started working at Tropical Financial. I was offered a 401k and had no idea what it was, where to start or what to do. So I started to ask questions and I started to invest. I attended information sessions and researched and learned that if I want to retire one day I needed this 401k and I needed to start saving sooner than later.

It’s easy to open up a savings account and save, the hard part is not using the money when you have an emergency. A 401K is as simple as a savings account, it allows you to save money but with a set of rules attached.

Here are some important tips to get you started and on the right track when it comes to your 401K.

Contribution Amounts

One of the best things about tax-deferred retirement accounts like the 401(k) is that you make contributions pre-tax, so in addition to saving for the future, you’re reducing your income taxes right now. But there are limits set by the IRS to how much you can put away each year. For 2016, the limit was $18,000; however, if you’re 50 or older, you can set aside up to $6,000 more per year in “catch-up” contributions. Be sure to check with a financial advisor to see the rules for 2017.

If your company automatically enrolls employees in their 401(k), the default contribution amount probably won’t be anything close to the maximum, but you can probably elect to contribute more. If contributing the maximum is not doable right now, one smart strategy is to funnel any future salary increases into your 401(k) until you reach the maximum contribution.

Matching Funds

As part of their employee benefits package, many companies will match employee contributions to a 401(k) up to a certain percentage. If your employer offers matching funds, be sure to contribute at least as much as you need to get the full match. Otherwise, you’re leaving money on the table.


Any money that you contribute to your 401(k) is completely owned by you, from the start. Though your investments may go up or down, you still own it when you leave your employer. Some companies, though, impose “vesting” requirements on the matching funds they contribute to your account. They may, for example, require you to stay employed for a set amount of time before you’re entitled to (or “vested” in) the funds they contribute to your account. So, if you leave your job before fulfilling your employer’s vesting requirements, you may receive only a portion (or none) of the matching funds.

Investment Options

Most 401(k) plans have several options for investing your retirement savings and some may even offer the services of a financial advisor to help you choose the right mix for your age and investment goals. As a general rule, though, the younger you are, the more risks you can take because you have more time to make up for any potential losses. As you get closer to retirement, you’ll probably want to shift toward more conservative investments. Whatever your age, though, it’s important to be diversified – which is just a fancy way of saying “don’t keep all your eggs in one basket.”

I know, that’s a lot of information to take in but it’s important to know and understand what a 401K is and how it can benefit you.

For more information regarding retirement type accounts, speak with a TFCU representative, we’d be glad to help you get on the right financial path.