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How Much to Save For Retirement

Retirement Account Focus, Part I

If you're an athlete, 401(k) sounds like it should be the length of some torturous marathon. Retirement as a goal really is like a long, slow marathon, and a well mapped out plan makes finishing on your feet a real possibility.

If your employer offers a 401(k) plan, you should take advantage of it immediately — especially if your company matches. Most large company plans match 50 percent of your contributions and up to six percent of your salary. If your match is less than the norm it's still beneficial to participate, because any type of match means free money.

If you think you can't afford to contribute much, start small and increase the contribution amount by one percent each quarter. The contributions you make to your 401(k) are pre-tax dollars, so if you're in a 30 percent combined (federal and state) tax bracket, each dollar you put into a 401(k) will reduce your paycheck by just 70 cents.

Does your employer offer a 401(k)? If so, are you a participant?


Join The Conversation
just_kelly just_kelly 9 years
I'm working for the state that auto invest a certain percentage of your check into a savings account WITHOUT deducting it from your check! Free retirement! I'm using it as a time to open a Roth IRA and pay off my final debts.
pookietrue pookietrue 9 years
Don't forget that what you contribute also reduces your taxable income so you can potentially drop tax brackets! Talk about savings!
ElissaM ElissaM 9 years
I contribute the max 6% of my paycheck that they will match...
hotstuff hotstuff 9 years
I also always hear from financial advisors that you should only contribute up to what your company matches you shouldn't contribute more than they will match!
JennaV JennaV 9 years
Thank you very much Savvy and alikat! My company does indeed use Fidelity, so I am heading over to the website right now to see if I can do my changes online.
popgoestheworld popgoestheworld 9 years
Someone up there referenced a SEP, which is a self-employment pension. It's what I have because I'm self-employed. It's similar to a 401k in its intent, but I believe you have a bigger maximum (25 K)? For people wondering about their work's 401k options, do you have an HR department? You can just ask them and they can hook you up. It's not too late to join.
shanimalcracker shanimalcracker 9 years
I do have a 401(k). The only thing is, this is my year off before law school so I know it is good for me to minimize cash assets to hopefully get some financial aid for school. Consequently, I am putting a ton of my paychecks into my 401(k) and having less spending cash is always a little bit of a damper.
juju4 juju4 9 years
At my company, contributions can only be changed at the begining of a quarter. During the quarter, the only change that can be made is that you can cease contributions. Also, please remember to keep track of your 401(k) if you change employers! I have seen employees leave a firm and decide to leave their 401(k) where it is(instead of rolling it over into another 401(k) or IRA) and then the next time they move they forget to update their address with the employer that is holding their 401(k). I can't imagine having my quarterly statements sent to the wrong address every year.
joannakm joannakm 9 years
hi savvy- my employer does offer a 401k but i am not sure about the matching options. my question is...i have been at the same company for 6 years and have yet to join the 401k. is it too late??? thanks!
Smart-Living Smart-Living 9 years
JennaV- alikat07 had spot on advice. You can contribute up to $15,500 a year and can change your contribution amount at any time. Savvy
alikat07 alikat07 9 years
I just started a 457(b) where I work, which is similar to a 401(k)/403(b) but has a bit more flexibility. I only contributed the minimum for the first few years I've been employed... but once I started educating myself about finance I was horrified at my mistake! I think the reason I was able to ignore this is that I have a pension program at my work, but it really only ends up being worth much if you work at the same university for 20-30 years. JennaV - check with your HR department about contributing more. Many companies use Fidelity or other companies that provide online access where you can change your contributions and monitor the investments.
fadedblue fadedblue 9 years
If your company's 401k doesn't offer any matching, is it still worth participating in? Or would it be better to just put aside money in savings or an IRA?
SweetnLow SweetnLow 9 years
I have a SEP. Is that the same thing? They put a standard amount in, but they don't match.
Renees3 Renees3 9 years
Heck yes I'm in the 401K. When I was told I get free money I was like Where do I sign?!?!?!? My problem is that, with putting money into my 401K, I don't have any money left over to put in any other savings. I live paycheck to paycheck.
JennaV JennaV 9 years
Yes, I have a 401K at work. My question do I go about having more taken out of my check towards my 401k :?
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