5 Steps to Set up a Retirement Account

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You’ve heard it before, but now is the time to start thinking about your retirement. With a good plan and the right accounts, you can have the financial freedom you want later in life. According to SoFi experts,”There are many different types of retirement plans, and it can be confusing to know which is right for you.”

 Here are five steps to set up retirement accounts:

Determine your retirement goals

Before you start to invest, it’s important to know the goals you want your money to help you reach. This will determine how much you need to save and how long you’ll need to continue contributing. It will also help determine what other assets and resources you have available that can be used in retirement.

In addition, it’s crucial that retirement savers understand their risk tolerance—that is, how they feel about investing in stocks versus bonds or other low-risk investments that don’t fluctuate with the market. Risk tolerance can be influenced by factors such as age and health status as well as a person’s financial situation.

Consider your income tax bracket

The income tax bracket is the range of income that you fall into. The higher your income, the more likely it is that you will be in a higher tax bracket.

Most retirement portfolios are made up of stocks and bonds—both of which can have large returns in good years, but also suffer large losses in bad years.

For example, if you invested in a stock like Apple with a 7% return one year and then it dropped 20%, then your gains would be 7% and your losses would be 20%. 

Choose the right retirement account for you

If you have a 401(k), great! The next step is to decide if it’s your best option. A 401(k) can be useful if you’re working for an employer that offers one and want to put money aside for retirement. If the company gives matching funds, then the value of your account becomes even greater.

If not, there are several other types of accounts available to help get started: Roth IRA, Traditional IRA and SEP IRA. This article will help you choose which type works best for your situation.

Pick an appropriate investing approach.


  • First, consider your risk tolerance. Where on the scale from conservative to aggressive do you fall? How much can you stomach losing in exchange for potentially higher returns?
  • Then, consider your time horizon. How long do you have until retirement (or another financial goal)? The longer it is, the more willing you should be to take on risk because there is more time for investments to recover if they go south.
  • Finally, think about your investment goals: what are they and how much money do you need to have at different ages?

Mindfully monitor your retirement account


It’s important to monitor your retirement account from time to time and make sure it is on track. This can mean a number of things, but for most people it means:

  • Is your retirement account on track with your goals?
  • Is your retirement account meeting your income tax bracket? 
  • Is the investment approach I am using still appropriate for where I am in life (e.g., if you are young and just starting out in investing, then an aggressive approach may be better than one that is more conservative).


Hope this article has helped you understand the basics of retirement accounts. Now it’s time to start saving for your future!

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