You have made it! We are officially on the last episode dedicated to savings accounts and we are moving onto retirement accounts.
Before we go into all of the different types of retirement accounts that you can have, I think it’s important to compare saving vs retirement accounts.
We know that savings accounts are places where we save our money for certain financial goals. Retirement accounts are a type of savings account, but they are also very different.
Retirement accounts can be a mix of a savings account and even an investment account. I do like to group my retirement into my savings because this is money that I am saving for a long-term goal and money that I won’t be able to access until I’m of retirement age. This is money that I’m not putting in a high-risk account like a typical brokerage investment account, but because I have time on my side I can be a little risker.
For a traditional savings account or any other savings account, you don’t want these accounts to be risky. You want to know that if you put in $1,000 that you can get that $1,000 in a month or even a year. For retirement, I don’t mind if my $1,000 fluctuates because I know by the time I retire it will have grown much higher.
It’s important to have a clear distinction between savings and retirement though.
Savings is a great place for short-term and long-term financial goals. If you plan to use the money you have saved before 65 ½ then you want to keep it in a savings account. You also will want to have a savings account if you want your money to be in a safe, low-risk place.
A retirement account is an extension of a savings account. It’s a long-term savings account that is meant to help you during retirement when you no longer make an income. Sometimes it’s forced saving that you have with work and sometimes it’s a very intentional saving to save even more for your future self. The goal for this money is only retirement though.
As we move forward into our retirement episodes, I want you to keep this distinction very clear. Savings vs retirement is different. Everyone should have a financial goal to save money for their retirement so it should be another line in your budget alone with your other financial goals.
I’ll keep this episode short as we have a lot to unpack in the next few weeks! Congratulations on making it through the savings segment. I hope you all learned a lot! And I hope you all enjoy this new segment on retirement.
Thank you for listening to this episode of No Fear Finance, an Amalif Media show. Check out Amalfimedia.com for more content! We have something for everyone.
Until then, Have a great week and see you all on Monday.