How Millennials, Gen X should plan for retirement

By Retirement FOXBusiness

Retirement advice for people 30 and under

Ohio Deferred Compensation Executive Director Keith Overly on how the proposed changes to your 401(k) plan affect your retirement.

NAGDCA President Keith Overly on Monday explained how people under or over the age of 30 should start planning for retirement differently.

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Overly said that people under 30 should focus more on learning how to save and budget their money.

“You really need to look at getting in early and take advantage of the compounding of interest over a long period of time. They need to get into understanding and budgeting on their own because they are so far away from retirement and focused more on the present, we need to talk to them more in terms of saving rather than retirement,” he told FOX Business’ Liz Claman on “Countdown to the Closing Bell.”

Overy discussed how those over 30 years of age shouldn’t just focus on investing when planning for retirement.

“Make sure you are increasing your contributions [to your 401(k)] every year and more people can do that from what they really think. We find as they get closer to retirement, they do get more engaged and that is great. But the biggest thing is continue to save more, you can’t just invest your way to retirement but you have to save your way there too,” he said.

Overly also weighed in on the GOP’s proposal to cap the amount of money Americans are able to contribute to their 401(k) plans.

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More from FOXBusiness.com

Republicans in Congress are considering reducing 401(k) contribution limits in order to help pay for President Trump’s tax reform plan. However, President Trump pushed back against the proposal tweeting, “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”

Normally, when an employee puts money into their traditional 401(k) it is not taxed, so the money continues to grow, but when they begin to take money out of their retirement, it gets taxed. The GOP’s plan would allegedly tax American’s retirement plans upfront and not tax them later on.

“When it comes to retirement policy, we feel there is a real advantage to having those people especially if they’re a little bit strapped for saving for retirement to be able to get that advantage at the very beginning. What they (Republicans) are talking about is instead having the taxes on a post-tax basis, where you are paying the taxes now and getting some advantages when you withdraw the money in retirement,” Overly said.
 

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