The extra net pay some workers are about to get from Pres. Trump’s payroll tax cut is money diverted from the Social Security fund. And Social Security doesn’t fund an easy retirement lifestyle for a lot of people as it is.
If you’re getting the windfall but want to keep it going toward retirement, you can put it in a 401k or IRA. Financial Advisor Mark Platt says you don’t have to be super wealthy to start an Individual Retirement Account.
But for a lot of people, the better option is the 401k with their employer putting in a matching amount up to a point. Not all employers offer that. Check with yours to find out if it’s an option.
The big thing to talk to a financial advisor about in any case is the risk. The risk may be losing money when the stock market slides. If you’re close to retirement, you may not have time to recover from a slump before you need the money if too much of it is in stocks.
On the other hand, the risk could be bonds and bank accounts not growing money as fast as inflation. Those investments are safer and may barely budge when the stock market drops. But they also don’t go up much when the market is good. Someone who has many years before retirement could find the money hasn’t even doubled even though prices have multiplied by many times.