Saving for the Future

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Saving for the Future

Saving for the Future

Saving for Retirement

Retirement is often one of those things that gets overlooked when it is years into the future. However, the earlier you start putting money away, the more it will pay off…literally! That’s because of compounding interest. Basically, your interest is earning interest and the longer you save, the quicker it will build and the more you will earn without having to do hardly anything.

For example, say Emily started saving at the age of 25 and she is putting $500 away per month in an account that earns 6% APR. By the time she turns 65 she will have $1 million dollars. Dave, on the other hand, started saving at the age of 35 and is putting the same amount away in the same account. By the time he turns 65 he will only have $500,000 saved. With just a 10-year difference Emily has saved 50% more than Dave!

Create a Habit of Saving

So how can you get started? The best way to get started is looking over your budget. Maybe you can only afford $100 right now, or maybe there are some other areas in your budget that you can cut back on so you can save more. Whatever you do, just get in the habit of setting aside a certain amount per month.

Types of Retirement Accounts


A 401(k) is a type of retirement account that is offered through your employer. Upon employment you will be asked how much money you want withheld from your paycheck to go into the 401(k) account. If they offer a match, take advantage! This means that if you add money to your account, the company will match it dollar for dollar up to a certain amount. In other words, free money! There is a limit on how much you can contribute to your account per year though. For more information, ask your employer or refer to the IRS website.

There are two types of 401(k) accounts too. With a Traditional 401(k), the money that you contribute can be deducted from your taxes that year. However, you will have to pay taxes when you take the money out when you retire. With a Roth 401(k), you will have to pay taxes on the money that you put away but when you take the money out at retirement age, you do not have to pay taxes.


An IRA, or Individual Retirement Account, is another retirement savings account but it is not offered by employers. You can find these at just about any financial institution. Just like 401(k) accounts, there are Traditional IRAs and Roth IRAs. Traditional IRAs are tax deductible where with Roth IRAs you will have to pay taxes. One of the positives to a Roth IRA is that when you get to retirement age, you should have a nest egg of savings built up, and since you have already paid taxes on this money, it won’t be as big of a tax hit when you take the money out. Regardless of which account you choose, we recommend talking to a tax or investment advisor to determine the best option for you.

Saving for College

It is never too early to start thinking about a college savings plan for your child. According to Experian, the average student loan debt in 2020 was $38,000, showing why it is so important to learn about what your financial options are when it comes to saving for college.

Types of College Saving Accounts

Education Savings Account (ESA)

An Education Savings Account (ESA) is like a Roth IRA because your savings can grow tax-free and as long as you use the funds for education expenses, the withdrawals are tax free too. However, you can only contribute $2,000 per year per child. If you want to invest more than $2,000 per year, a 529 plan is another alternative. Just like an ESA account, this account grows tax-free but you have the option to change the beneficiary to another family member. So, if your firstborn decides not to go to college, you can still use the funds for your other child.

CTCU Youth Certificate

Another account that can be used for college savings is a CTCU Youth Certificate. Our youth certificate is a 12-month CD that is only available for kids 18 or younger. While you cannot touch the money for a year, this certificate has a high rate of 4% APY, or annual percentage yield, and you can deposit money at any time throughout the term of the CD. At the end of the 12-month term, the funds are available for your child or you can roll that money into another Youth Certificate for another year. For example, let’s say you open a Youth Certificate for $1,000. By the end of the year, the CD balance will be $1,040. If you use that $1,040 to open another Youth Certificate, by the end of the year you will have $1,081.60, and if you continue to do this for 18 years, you will have over $2,000. That’s doubling your money! Plus, if you added money into the account every month, you would be looking at an even bigger savings.*

Costs of College

The cost of college goes beyond tuition. You also need to take into consideration room and board, books, meal plans, and more. Keep in mind that in-state public universities are generally much more affordable than the cost of out-of-state or private schools. To compare the costs of different schools, check out this Dave Ramsey College Calculator, and don’t forget to apply for scholarships! Even if the scholarship is a few hundred dollars, taking the time now to apply will save you big in the long run.

At CTCU, we offer four $2,500 scholarships per academic year that are available to high school seniors attending school within our field of membership. For more information on how to apply, reach out to your guidance counselor.

*Rates effective as of March 16, 2020. Maximum amount deposited is $10,000. Maximum balance is $10,000 plus compounded yield. Rates may change after accounts are opened, except fixed rate Term Share Accounts (Certificates). Fees may reduce earnings. The minimum to open and obtain the APY is $20. Penalty will be imposed for early withdrawal for Term Share Accounts. APY=Annual Percentage Yield. Federally insured by the NCUA. View Full Disclosures.

Start investing in your retirement now.

CTCU offers three types of IRAs for you to choose from.

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