Start Saving, Protect Yourself

With an Ongoing pandemic, social injustice, and the 2020 election right around the corner, it’s uncertain how the future is going to look. That being said steps can be taken to protect our financial futures’.

During this pandemic, many people have unfortunately lost their jobs as a result of businesses shutting down. In response to the sudden spike in unemployment, the United States government passed the CARES Act. This bill was used to support the United States' economy from going under due to the decrease in the circulation of money. The total value of the CARES Act was around $2.2 trillion. To put that into perspective you could buy all of Apple (1.64T), Netflix (213B), Starbucks (88.4B), and still have about 258 billion left over. All of the money used for the CARES Act was added to the growing United States debt, which is approximately $22 trillion.

The US Government borrowed this money with no clear plan to pay off the debt in the foreseeable future. Although there is no clear plan to pay off this debt, the most likely scenario will be that the government will raise taxes. The increase in taxes will result in more income for the government which will allow them to pay down debt slowly over time. I don’t know about you, but I don’t want to give the government more money because of a pandemic I couldn’t prevent. That being said you especially don’t want to have to pay these taxes in the future when you’re older and want to retire. Although there isn't clear evidence that taxes will be raised, we can assume for the government to gain more revenue they will either tax the citizens, big businesses, or both more.

This is where the Roth IRA comes into play for protecting your future. You're probably asking yourself, "What is a Roth IRA and why should I invest in one?" Well first and foremost a Roth IRA is a retirement account in which you invest after-tax dollars, then upon retirement, you get to withdraw those gains tax-free! After that, you're probably asking, “Then why would I start one now? Retirement is so far away.” Well, the early you start investing the early you get into a habit of investing, you also take advantage of time, and you will protect your wealth for the future.

For example, let’s assume you’re 20 years old and you invested $2,000 every year until the retirement age of 65. At that age of 65, you would've accumulated $318,675, assuming the markets grew 7% every year. That's $70,000 saved and invested over your entire life. This grew to be almost 4 times the value you put away, and the more you invest the greater the amount will be. The best part about it is that you get to withdraw all that money tax-free!

Now that you don’t think it's such a bad idea, how is this protecting your wealth in the future? Well if the United States does increase the amount that it taxes its citizens, then you want to prevent the government from taxing your saved money. The Roth IRA can protect and grow your money so the pandemic today doesn’t affect you in your retirement years later. I highly recommend that you go speak with a licensed professional today, or do more research about saving for retirement.

You can open up a Roth IRA with many investment services or brokerages. I use the Later feature on Acorns to save for my retirement, and here’s a link to get started: https://acorns.com/invite/TKETZT . Just for opening the account with Acorns. Just for opening the account, Acorns will reward you with $5 to get started investing in your future. This article is only my opinion go seek a licensed professional to figure out what's best for you.