A Very Smart Money Step for Gen Z

August 02, 2023
A Very Smart Money Step for Gen Z

Here are some reasons why Gen Z workers should sign up for a retirement savings plan at work as soon as they can.

If you are in your first “real” job and starting to make decent money, odds are that you’re focused on enjoying your life, your friends, and your new freedom. You probably don’t think about an event that’s 40 or 50 years down the road — your retirement. Yet strangely, now is probably the best time to start laying the financial groundwork for the time you’ll leave the workforce.

Here’s why you should jump at any opportunity to sign up for a retirement savings plan at work as soon as you can.

  • You’ll be in control. When you enroll in your employer’s plan, you choose how much to contribute and where you want your contributions invested (from a menu of investment options). You won’t be locked into your choices — you’ll be able to change them if you want to.
  • You are young, and that’s an advantage. As investment earnings are reinvested along with your plan contributions, you’ll have a bigger pool of money invested for potential growth. The longer your money is invested, the more you may benefit.1 So starting early is very smart.
  • You’ll get tax benefits. Every dollar you contribute to your plan account on a pretax basis really costs you less than a dollar in take-home pay. Here’s how it works: Your contributions are subtracted from your pay before (and often state) income taxes are calculated. That means you pay tax on a lower amount of income. You contribute more to your plan account than you give up in spendable pay. The earnings on your plan investments are also tax-deferred. You won’t pay income taxes on pretax contributions or plan earnings until the money is distributed to you. These tax breaks can make it easier to build your savings.
  • You’ll enjoy a more secure financial future. The money you set aside in your retirement plan account will be your money no matter what — yours to spend as you choose when you exit the working world.

Sure, looking so far into the future can be a little strange and may be intimidating. But given increasing life spans, uncertainty surrounding the future of Social Security, and the always looming possibility of inflation making everything more expensive, it’s smart to do a little planning now to help strengthen, your future financial security. For help with your planning, talk to a financial professional.

You may contact Popular’s Retirement Center at educacionretiro@popular.com. If you have a 401k plan with Popular, remember that you can count on our group of experts at TeleBanco Popular® to guide you on matters related to your retirement plan. Call us at 787-724-3657 (press option 2 three times).

Source/Legal Disclosures:

1401(k) and similar retirement savings plan accounts can gain or lose value based on economic conditions and market events. Principal is not guaranteed an may lose value.

The information and general descriptions found in this article are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investment within your retirement plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate this information and the general descriptions found here to exercise your independent judgment. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates are not engaged in rendering legal, accounting or tax advice services. If legal, accounting, or tax advice services are required, you should seek the services of a competent professional. Investment products are not insured by the FDIC, they are not deposits or obligations of, nor are they guaranteed by Banco Popular de Puerto Rico, its affiliates and / or subsidiaries; involve risks, may lose value, including the possible loss of the principal invested.

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