This is one of many questions that people have when first given the option of beginning a 401k account: “Is a 401k worth it,” “What is the maximum 401k contribution I can make,” “How much does my employer contribute to my 401K?”
Short answers? Yes, it varies, and yes. A 401k is one of my favorite methods of saving for retirement. They are an incredible tool in the roster of any savvy saver because they offer tax advantages in addition to building a solid foundation toward a strong retirement.
And if that isn’t already enough to convince you: Most employers offer to match a percentage of your contribution, that’s free money!
So, head below and click play to watch part 3 of the Question Mark series on retirement planning.
Transcript
401k — it’s a great savings vehicle, and one of the reasons why I like it so much is, number one it’s usually offered through work.
Two, you can have the money that’s deposited into your 401K taken out of your paycheck before you ever get it. That’s a great thing, because then you’re saving without feeling it.
On top of that, most employers offer a match, and a match means that for a certain percentage of what you put in, they’re going to put in their own money to your retirement account. That’s awesome. You’re getting free money. So, I tell most people at least save up to the match. Take advantage of the free money your employer is going to give you.
On top of that, any money that you deposited into your 401k is taken off your taxable income for that year. You’ll only pay taxes when you use that money, hopefully in retirement.
So, it’s really got some great advantages, and you should definitely take a look at what they offer.
For more answers to common retirement planning questions, check out the rest of the Question Mark: Retirement Planning series.