We can obviously all save money in regular bank and brokerage accounts, whether it be for a new car or other future investments. This chapter discusses special accounts for the purpose of saving toward retirement. These accounts, humorously illustrated in Figure 5.1, have two advantages. First, they provide discipline in our saving behavior by enforcing and enticing regular contributions and by discouraging early withdrawals. Second, they typically come with substantial tax benefits.
I start with a brief discussion of Social Security, which is not strictly an account, but rather a savings system, whereby the federal government taxes us in exchange for promises of future payouts. Furthermore, most employers, but unfortunately ...
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