When starting over in a new country, saving for retirement might be the very last thing on anyone’s mind. Finding a job and a place to live, paying bills, funding an education, and many other priorities might seem more important. But saving for retirement is a critical part of long-term financial planning.

Many immigrants may not know they may already have access to an easy retirement planning account. A 401k is a special kind of employer-offered retirement savings plan that many include as part of an employee benefits plan. This retirement savings plan invests a portion of an employee’s take-home pay in an invested savings account. “Invested” means that funds are invested in the stock market, and savings grow over the years as the stock market does. This is critical because proper investment in a 401k can help with retirement savings goals more quickly than by using a personal savings account.

Someone may say, “This sounds great, but I am still young, so why would I need to save for retirement yet? I need all of my take home pay now!” That’s understandable, but in many cases, this is actually a mistake! Don’t miss out!
Because employer-sponsored investment plans often offer a savings-match that can help reach your retirement goals more quickly, 401k’s are an easy way to begin investing. The employer makes an investment on behalf of the employee, usually through a professional asset management firm. Even better, if an employee changes jobs, the employer’s contribution follows the person to the new company. As part of a benefits package, matched funds in a 401k belong to the employee, as long as specific time and contribution requirements are met. Additionally, any personal contributions made in a calendar year may lower the amount of individually taxable income. The best part? The younger someone is when they start saving, the more money they will have when they retire.

How to get started with a 401k:
1. Talk to a boss or the employer’s Human Resources department about any retirement savings plans offered. Usually, 401k plans are available only to full-time employees; unfortunately, those who are part-time, per diem, or contract workers may not be eligible for the employer plan.

2. Complete a budget to see how much retirement savings are reasonable to budget each month. It’s most efficient to “max out” the retirement savings match each year. For example, if a company offers a 100% match on up to 3% of an employee’s annual salary, try and set aside 3% of each paycheck to be deposited into the 401k. HR can help set up a direct deposit from paychecks.

3. Ask to meet with the 401k’s portfolio manager. This is not possible with all employer-sponsored plans, but if it is, take advantage of the opportunity to understand the investment portfolio and plan long-term.

But what if an employer doesn’t offer a 401k retirement savings plan? Everyone needs to save for retirement, and there are other options for those without an employer-sponsored 401k. ProperityME offers a “Saving to Build Wealth” class, in which students learn all about investment and savings options to help make the most of funds available. Contact ProsperityME to register for class or set up a one-on-one counseling appointment, which can help you decide how to start saving!