retirement

Retirement Planning: What's the Difference Between Roth IRA and Roth 401(k)?

There are two main options in retirement accounts: Roth IRA and 401(k). Both types of accounts allow you to contribute funds after taxes, meaning you pay taxes up front when depositing money rather than later when you're withdrawing funds. However, despite their similarities, these accounts also have different perks and drawbacks, depending on your financial situation and retirement plan. Here are a few key differences between these types of retirement accounts.

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When Do You Start Figuring Out Retirement?

You just started a job or graduated college. Retirement can seem like very long way from where you are in life. But life can move fast and thinking ahead puts you in the drivers seat. Ask yourself three questions: Where do you want to be in 40 years? What type of lifestyle do you want? How much is that going to cost you?

Retirement is a life change that is impending so saving as soon as possible is ideal. If you're already spending 30 percent of your income saving, investing and paying off debt, then you're on a good track. Krista Neeley, the Regional Vice President of Appreciation Financial, answers questions you may have wondered about personal finances.

P: What's the basic difference between a 401k, and Roth IRA? What is each best for?

KN: The first difference is your employment, they also differ in tax strategies, one is post tax and one is pretax. Ideally you should have variety in your tax codes through retirement savings, so either of these strategies may be great and if coupled together in a financial portfolio, that would be best for the participant. Roth IRAs are a beneficial way to save post tax for retirement while 401ks/403bs/457bs may be eligible for matches from your employer or company, which make it a great mechanism to save through as well.

P: What are guidelines for picking the best option for an individual?

KN: The first thing to examine is contribution amounts, select a comfortable amount to contribute each month, then stretch it. Once the habit is formed you will surprise yourself with how much you can save! Down the road, you will never regret saving "too much" and it is extremely empowering to surpass your savings goals.

P: When do you need to begin planning for retirement?

KN: Yesterday. Probably not the answer anyone wants to hear, however every day you are only getting closer to that day so it makes sense to put aside a small amount each day to prepare for that important deadline that is rapidly approaching.

P: Regarding financial planning what do you need to be doing?

KN: Ideally you should be in the routine of saving per month.

$200 in your 20's

$300 in your 30's

$400 in your 40's

$500+ in your 50's

$500+ in your 60's

In your 70's: This is the distribution phase of retirement so hopefully at these ages you are enjoying your retirement!

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Best and Worst States to Retire – An Analysis by WalletHub

There are some people who plan to work hard 'till their old and grey. But for the majority, we're putting in all we've got now so we can enjoy our golden years with blissfully well-deserved rest and relaxation. Retirement is on the radar for almost everyone, whether that day will come in decades from now or is just around the corner.

As per the personal finance website, WalletHub, "31 percent of all non-retired adults have no retirement savings or pension because many simply cannot afford to contribute to any type of plan." This puts where they live at high importance. Factors like cost of living and senior-friendly accommodations vary from state to state, so those planning retirement without significant savings should research some of the best (and worst) states to retire. Planning ahead of time will make retirement less stressful and more money-wise.

WalletHub conducted an analysis comparing the 50 U.S. states and the District of Columbia using 31 key metrics including affordability, adjusted cost of living, entertainment, crime rate, health-related factors, and overall quality of life, to determine which states are the most retirement-friendly and those that would not suit retirees as well. As per WalletHub, the states which scored the best, "let you keep more money in your pocket without requiring a drastic lifestyle change."

See if your state made the 10 best or the 10 worst list or if any of the states which stood out were ones you or a family member were considering for retirement.

10 Best States to Retire

  1. Florida
  2. Wyoming
  3. South Dakota
  4. Iowa
  5. Colorado
  6. Idaho
  7. South Carolina
  8. Nevada
  9. Delaware
  10. Wisconsin


10 Worst States to Retire

  1. Rhode Island
  2. Alaska
  3. District of Columbia
  4. Connecticut
  5. Hawaii
  6. New Jersey
  7. New Mexico
  8. Vermont
  9. Kentucky
  10. Arkansas

For the full ranking, see WalletHub's analytical findings here.

If retirement is on your mind and you'd rather enjoy your years of leisure sooner than later, here are some tips to get you on the path to retire early. Work hard now and allow the rewards to pay off later!

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