Choosing the Best Retirement Accounts For You

Once you choose to start investing for retirement, the number of account type options can feel overwhelming. Reading through the names of the different categories can feel like it’s alphabet soup! 

Choosing the best retirement accounts for you

Different retirement accounts have different rules, restrictions, benefits, and special qualities. Let’s dive in, look at the options, and decide which type is the best retirement account overall! 

PROS of a Savings Account

Savings accounts are reliable. There’s virtually no risk that you’ll lose the money you deposit since qualifying US savings accounts are insured by the FDIC up to $250,000. 

CONS of a Savings Account

Ultimately, a savings account is not an appropriate place for the bulk of your hard-earned money, primarily due to inflation. Inflation in the US averages over 3% per year while the average savings account interest rate is about 0.1%.  

Employer-sponsored defined contribution plan

Defined contribution plans are basically the reverse of a traditional pension plan. Instead of receiving a fixed income from the investments like a pension offers (a “defined benefit”), you receive a variable return on your investment based on what you put into the plan (a “defined contribution”).

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