This is the most important retirement
decision you will make in your 20s!
WHAT IS A 401K?
→ Retirement account through employer
→ Pre-tax contributions
→ Reduces your taxable income NOW
→ Pay taxes when you withdraw in retirement
→ 2026 contribution limit: $23,500
WHAT IS A ROTH IRA?
→ Individual retirement account
→ After tax contributions
→ NO tax reduction now
→ Tax FREE withdrawals in retirement!
→ 2026 contribution limit: $7,000
THE KEY DIFFERENCE:
401k = Pay taxes LATER
Roth IRA = Pay taxes NOW (better if young!)
WHY ROTH IRA WINS FOR UNDER 30:
You are likely in lower tax bracket now
→ Paying taxes now at 22% rate
→ In retirement might be 30%+ rate
→ Roth locks in lower tax rate!
COMPOUND INTEREST EXAMPLE:
$7,000/year in Roth IRA from age 22-62
= $84,000 invested
= $3,800,000 at retirement (at 10%)
= ALL TAX FREE! 💰
WHAT TO DO:
STEP 1 — Get full 401k employer match FIRST:
→ This is 50-100% instant return
→ Never leave free money on table!
STEP 2 — Max out Roth IRA:
→ $7,000/year = $583/month
→ Open at Fidelity or Vanguard (free)
→ Invest in S&P 500 index fund
STEP 3 — Go back to 401k:
→ If money left after Roth IRA
→ Contribute more to 401k
THE PERFECT ORDER:
- 401k up to employer match
- Roth IRA up to $7,000/year
- Back to 401k up to $23,500/year
- Taxable investment account after that
Start your Roth IRA TODAY at Fidelity.com
Takes 10 minutes to open! 🏦
