401k, IRA, 403b, Roth IRA, HSA, Stocks, Bonds, Mutual Funds, Index Funds, oh my!
I don't know about you, but I didn't learn about any of this in school. There were electives in college I could have chosen, but since they weren't required for my major, I did not take them. It all seems a bit ridiculous, but is absolutely necessary to have knowledge of if you want to have a secure retirement.
Simply saving the money you make in your job will likely not be enough for you to retire comfortably, say at the age of around 65. It depends on your lifestyle and where you live, but it is generally recommended to aim for 1 to 1.5 million dollars. This includes money in retirement accounts such as a 401K and an IRA. Unfortunately, this is out of reach for a vast majority of people.
So, how do you get there? Well, your best bet is to invest. How do you invest? Sadly, it's complicated. But there are many free guides that exist that will simplify things. Investing can also be very risky if you do it wrong. Recently, a 20-year old took his life after losing thousands of dollars in the stock market.
This is an extremely sad story, but it highlights a few important issues. First, a lack of education. The method this fellow used is very risky and akin to betting large amount of money on a horse race. It's not clear whether he was aware of the risk. After losing that much money so unexpectedly likely put him in a state of shock and felt that his life was over. The thing about the stock market is that it fluctuates constantly. You can get rich quick, but you can also get poor just as quick. If you're hoping to make lots of money in a short period of time, forget about it. When it comes to investing, you need to think, long-term.
Back in the day, many people hid their money. Some even buried it in their backyard. It's because they didn't trust the banks. Now, if you do this, you are losing money. Even if you have your money in a average savings account you are losing money. How much? Obviously it depends how much you have, but potentially a lot. Sadly, there's this crazy thing called inflation in which the value of your money decreases over time. Lame, right? Yes, I agree.
What's the solution? Invest! Putting your money in the market allows it to grow and offsets the effect of inflation. Sadly, it's not at all obvious how to go about doing this. You have to do your research. Because of this learning curve, a big chunk of the population will never make the efforts. It's so important to invest for your retirement, many companies automatically enroll you for a retirement account - typically in the form of a 401k or 403b. If you have either one of these, great! This is a good start, but likely still won't be enough.
Here are some great guides:
