Activate Your Money

CHAPTER 13Retirement Accounts: Build Values into IRAs and Employer Plans

The belief that we can depend solely on Social Security or a pension plan in our retirement is beginning to sound a bit unrealistic, particularly to younger generations. Whether we like it or not, it's on us to plan and save for our retirement. And we can't start too soon.

Even though we know that we should, many people are not saving enough for their retirement. When I was young, I certainly didn't heed the recommendation of advisors who suggested we maximize our retirement contributions from an early age. At that time, I didn't understand my options. Over the years, I have contributed to traditional IRAs, SEP IRAs, Roth IRAs, 401(k)s, and 403(b)s.

If I'd been smarter from the beginning, I probably would have invested in retirement accounts earlier. And if they'd been available, I would have probably used Roth IRAs during my younger years when my income was relatively low. When they were introduced in 1997, I shifted some of my IRA assets to a Roth, but I really didn't know what I was doing, and there was no one to help me. In hindsight, if I'd been more on top of my money then, I probably would have transferred even more assets.

Whenever I had an employer that was willing to add their money to my 401(k) contributions, I tried to invest enough to receive the entire match. In my view, that was free money that I could grow over time. I also saved money in nonretirement accounts, so I could have capital ...