You: Explain to me the difference between Social Security and a 401(k) plan again. Both of them are for retirement right?

Yes, but the similarities fade very quickly. In fact, it wouldn’t be an exaggeration to say that Social Security and a 401(k) plan are both retirement plans in the same way that a Walkman and an iPod both play music through headphones.

You: What?

You would never mistake a Walkman with an iPod.

You: What’s a Walkman?

Really?

You: No, just trying to make you feel old. I think I saw one of those at a garage sale once.

I feel the love. The point is that you should never confuse what Social Security and your 401(k) plan each provide. They’re so dramatically different it is little wonder that Social Security remains an involuntary system. You must take part.

You: That’s FICA taking my money again, right?

Right. As a result, you must choose to participate in the 401(k) plan. Do so, because you may never have a better opportunity to save for retirement. As we discussed earlier, you need to turbo-charge your pogo stick for your retirement–and the 401(k) plan is the best way to get started. You simply can’t afford not to enroll in your 401(k) plan.

You: When?

Today is a great day.

You: But the form–

–is so easy to complete it’s scary.

You: But the cost–

–is far less than you fear, thanks to the tax savings.

You: Explain that part.

I will. Stay tuned. All part of your financial education and living Beyond Paycheck to Paycheck.

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