Rio Grande Credit Union
Rio Grande Credit Union

Retirement Tips

It is never too early to begin thinking and planning for your retirement.

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One of the most common ways to save for retirement is through a 401(k) plan, a retirement savings account that is sponsored by an employer. This is the easiest way for younger employees to get started on retirement savings, and employers often match a percentage of your contribution. With a 401(k), you can make contributions on a pretax basis. That means the money is withdrawn from your salary before federal and state income taxes are deducted, lowering your taxable income, thus your taxes. If you leave your current employer, you have several options: roll the balance into a new plan, shift it into an IRA, leave it in its original plan, or withdraw the balance in a lump sum. Withdrawing the balance, however, is almost never a good idea due to federal income taxes and withdrawal penalties.

Confused about the right plans for you? Learn more about the most common types of employer-sponsored retirement savings plans.

Roth 401(k)

A Roth 401(k) plan combines the features of a regular 401(k) with those of a Roth IRA. You contribute after-tax dollars and although you won't receive an up-front tax break, your account grows tax-free as long as you've had the account for at least five years and are 59 ½ or older.

Individual 401(k)

An Individual 401(k), also known as a Solo 401(k), is for sole proprietors who have no employees. This kind of account is best suited to those who want to save large sums, since it allows you to save for retirement both as an employer and an employee. Your contributions can change from year to year, so you could potentially save the maximum allowable amount one year and nothing the next.

403(b) Plans

403(b) plans are similar to 401(k) plans except they are offered to employees of tax-exempt or nonprofit organizations, such as schools or hospitals.

457 Plans

457 plans are offered to employees of state and local municipal governments, as well as some local school and state university systems.

Thrift Savings Plans

Thrift Savings Plans are offered to federal civilian and uniformed services employees. These plans have many features in common, although contribution limits, vesting schedules for employer-matched contributions, investment options and other details may differ, so read the plan documents carefully for your exact plan.


In recent years, there's been a huge increase in the number of self-employed contract workers and subsequently, a growing gig economy of short-term hires — a broad spectrum that includes temporary help agency workers, on-call employees, contract company workers, independent contractors and freelancers. Because income flows are less predictable, it can be more challenging to make long-term plans for your savings. Although the personal independence of these alternative work arrangements can feel unpredictable without company-provided benefits, the freelance workforce (along with small business owners) also has the ability to save for retirement.