For the uninitiated, a 401k is a retirement savings plan that allows you to consistently save until the day you no longer have to work. Money is regularly taken out of your pay in order to support the plan in question, and it takes several years for it to truly build. You might have a 401k being built right now, but how do you know if you're getting the most out of it? To maximize it, here are 4 methods to consider, courtesy of Bob Jain.
One of the ways to get the most out of your 401k plan is by increasing your savings with each pay raise received. This doesn't mean that the entirety of your raise has to be dedicated to the plan in question, but you can still contribute a few dollars more if you'd like. As a matter of fact, this is one of the best ways to reach the point of retirement earlier in life. Financial authorities such as Bob Jain would be hard-pressed to disagree.
What if your employer is able to match your contribution? Believe it or not, many workplaces match what their employees put into their respective 401k plans, which means that those men and women earn more money toward said plans. This accumulation of "free money," for lack of a better term, ensures that these individuals retire sooner in life. If you feel like you're not receiving this benefit, ask your employer to learn more.
If you're in a tight financial situation, it might seem like a good idea to simply take money out of your 401k. Depending on who helped you establish this plan to begin with, you may already know that this is a bad idea. For those that don't know, not only will this set back the progress you've made with saving money but you may be penalized with a payment that you must cover. Simply put, taking money out of your 401k early isn't worth it.
To wrap things up, and to help you truly maximize your 401k, review the plan in question at the end of each year. This will provide you with an opportunity to evaluate the progress you've made up until that point. It may also encourage you to make any financial changes that you see fit. If you feel like more money can be invested without hampering your day-to-day responsibilities, this should be considered. The more thorough your review is, the more you stand to gain from it.
One of the ways to get the most out of your 401k plan is by increasing your savings with each pay raise received. This doesn't mean that the entirety of your raise has to be dedicated to the plan in question, but you can still contribute a few dollars more if you'd like. As a matter of fact, this is one of the best ways to reach the point of retirement earlier in life. Financial authorities such as Bob Jain would be hard-pressed to disagree.
What if your employer is able to match your contribution? Believe it or not, many workplaces match what their employees put into their respective 401k plans, which means that those men and women earn more money toward said plans. This accumulation of "free money," for lack of a better term, ensures that these individuals retire sooner in life. If you feel like you're not receiving this benefit, ask your employer to learn more.
If you're in a tight financial situation, it might seem like a good idea to simply take money out of your 401k. Depending on who helped you establish this plan to begin with, you may already know that this is a bad idea. For those that don't know, not only will this set back the progress you've made with saving money but you may be penalized with a payment that you must cover. Simply put, taking money out of your 401k early isn't worth it.
To wrap things up, and to help you truly maximize your 401k, review the plan in question at the end of each year. This will provide you with an opportunity to evaluate the progress you've made up until that point. It may also encourage you to make any financial changes that you see fit. If you feel like more money can be invested without hampering your day-to-day responsibilities, this should be considered. The more thorough your review is, the more you stand to gain from it.
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