so, you guys, what’s the 411?
IR-yay — the feeling of satisfaction that comes with contributing to your IRA
So your summer internship is over and you’re heading back to school a little bit richer (both in experience and in $$). Though retirement is about as far off as it could possibly be (you’re not even out of school yet after all), your summer salary is considered earned income, and that means that money is eligible for contribution to your retirement account.
Chances are your employer isn’t offering a 401k to interns, which leaves you with opening an IRA. Here are a few reasons it makes sense to take that money right to the retirement home:
- Free Money: Usually things that sound too good to be true are…this is the one time it’s actually the real deal! Due to an amazing concept called compounding interest, money that you set aside for retirement multiplies all on its own. That means that the earlier you set it aside, the more it will be worth down the road!
- Tax Now, Save Later: There are two kinds of IRAs you can open, Traditional and Roth. Roth IRAs allow you to pay taxes on your income now versus when you retire. Your salary will usually increase over time, putting you in a higher tax bracket. So, if you pay taxes now, you’ll be saving even more money for later.
- Dorm Duty: While you’re in college, your cost of living is about as low as it will ever be. Meals and housing, the highest expenses in the real world, are included on campus! Take advantage by setting your money aside — and pretend it’s not even there to spend.
