DEAR GRADUATE

Here is some advice for graduates starting out in their first full-time job that I have posted often over the years -

Dear Graduate:

*  Participate in your employer’s 401(k) or 403(b) plan.  If cash-flow permits, contribute the maximum, which for 2026 is $24,500.  If you cannot contribute the maximum, try to contribute at least enough to qualify for the maximum amount of any employer matching contribution.  If your employer offers a ROTH 401(k) or 403(b) option choose this option.  As an alternative, if you are contributing the maximum put 50% in a “traditional” account and 50% in a ROTH account.

*  Participate in your employer’s medical expense Flexible Spending Account (FSA).  Be conservative and start with $1,000.  You can increase your contribution in subsequent years once you get a handle on your annual out-of-pocket medical expenses.

*   If you have any cash from graduation gifts left over open a ROTH IRA account and use this money to fund your 2026 contribution.  The maximum you can contribute to an IRA, “traditional” and ROTH combined, for 2026 is $7,500.

TTFN