The average retirement savings for a white family is around $80,000, while Black families only have around $30,000!
Most people have their retirement savings in a “401(k)” account. But what even is a 401(k), and if you don’t have one already, is it too late to get started?
401(k)s are tax-free savings accounts usually offered by employers. Sometimes they even match your contribution! For example, if you contribute $2,000 to your 401(k) annually, your employer could match 50% with $1,000, bringing your balance to $3,000.
But you can still save for retirement WITHOUT a 401(k) matched by an employer.
An alternative is an Individual Retirement Accounts (IRA), a tax-free savings account. You don’t have to go through an employer to use one.
IRA users are eligible for “saver’s tax credits” – which means they pay less in taxes. This makes it easier to save, especially if you don’t make a lot of money.
Sometimes we need early access to our savings funds – but withdrawing money from a 401(k) or IRA before the age of 60 costs a 10% fee plus any additional taxes, so avoid it if you can!
Retirement is definitely possible no matter your employment status! These types of savings accounts have the ability to provide life-long security through consistent contributions.