80% of millionaires built their wealth by doing this one thing – and I’m going to share with you exactly what it is and how you can do it too.

Hey MoneyLion, my name’s Austin Hankwitz and I talk about personal finance and investing online. Despite growing up in a small town in northeast Tennessee, I plan to retire wealthy – here’s exactly how.

Did you know that there are different types of retirement investing accounts? Let’s take a minute and touch on the two most popular ones.

First – let’s talk about 401k’s. 56% of employers in the United States offer a 401k plan to their employees. Simply put, this is a retirement savings plan with specific tax advantages. It was created by Congress in 1978 to encourage Americans to save for retirement – and it worked! The 401k plan is the main wealth-building vehicle 80% of millionaires credit their success to (credit source to Dave Ramsey research).

Here’s how it works – as an employee, you delegate a specified percent of your annual salary to be contributed toward your 401k retirement plan. People usually choose between 3-6%. Every paycheck, the money is automatically invested on your behalf. The best part? You’re able to write the total amount invested annually off of your taxes.

From a tax perspective, these can be great if you anticipate being in a lower tax bracket during your retirement.

If you’re really lucky, your employer might even match your contribution with money of their own. But don’t worry if your employer doesn’t do this – only 27% of companies in the US do. If you’re currently working a job that offers retirement planning, make sure to review all of the available options and choose what works best for your long-term goals.

Let’s now pretend you’re on the other side of the aisle and your employer doesn’t offer any sort of 401k plan – then what? Simple. Roth Individual Retirement Account.

Generally speaking, it’s the same thing as I just described with a 401k plan – BUT there’s no employer investing the money on your behalf. It’s you! There are a few rules you need to follow – like not investing over $6,000 into the account per year and still making sure that this isn’t money you’re planning on pulling out until you’re nearly 60 years old.

From a tax perspective, this is great for those that would rather go ahead and get taxed on the money they’re investing now – and enjoy the benefits of any appreciation later tax-free.

Bonus cheat code: if you have a 401k through your employer AND the means to invest in a Roth IRA on the side – this is totally fair game!

You may want to start by thinking about what you’d like your finances to look like in 30 years.

That can help you consider your options and put together a plan. But whether it’s a 401k, a Roth

IRA, or even an investment account that is not specific to retirement, the most important thing is setting money aside.

A brief heads up: this is a sponsored video. MoneyLion and I have partnered with the goal of making important financial lessons easier to understand. See you on the next Beyond the Wallet.

This content was originally published here.

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