How Does A Retirement Plan Differ From A 401(k)?

As a business professional, you have likely heard about the significance of building a retirement portfolio when first starting out your career. There are a number of ways to help build your retirement portfolio, including opening a 401(k) through your employer. In order to gain the best understanding of how a retirement portfolio works, it is important to understand its difference from a 401(k).

What Is A Retirement Portfolio?
In its most basic terms, a retirement portfolio refers to a plan that includes saving and investing strategies to help you build a savings account that can be sustained during your retirement. You can build your portfolio using various strategies, which can include a 401(k), individual retirement accounts (IRA), or index funds. The strategies used to build a portfolio will vary based on what your employer offers for retirement and what your ultimate retirement goals are.

What Is A 401(k)?
A 401(k) is one of the most common options for retirement planning that employers offer. As part of a 401(k), a pre-determined amount of money will be taken from each paycheck and used towards investment opportunities. These can typically be seen in the form of mutual funds. These accounts are typically tax-free and provide flexibility in building your retirement portfolio.

One of the major benefits of implementing a 401(k) through your employer is the benefit of matching contributions. As part of an incentive, many employers will offer some matching contribution, which means that they will add to your 401(k) each month, in addition to your own contributions. While your employer may not offer a full matching contribution, their efforts can help you to continue building your retirement portfolio over time.

Overall, a 401(k) is considered one of the most common strategies for building your retirement portfolio. When starting your first job, make sure to inquire about the type of retirement plans that are offered. This can be a highly beneficial piece of information to know that can help you make the most informed decisions about your future.

Originally posted on andrewcosta.co.