Broker Check
How Are You Funding Your Future?

How Are You Funding Your Future?

March 25, 2021
Why Should You Invest in a 401k?

There are so many other things to think about besides saving for retirement. You, like so many people, may want to avoid worrying about it until you have the rest of your financials in order. 

“I can save for my retirement after I pay off my student loans.”
“I’ll buy a house and then start thinking about retirement.”

The truth is, you should already be saving for your retirement, which is why it’s important that we work on your strategy together. Thankfully, there’s a simple way for you to start (or continue) saving – your 401k. More and more companies are offering 401ks as part of their benefits package, but are you getting the most out of yours?

What is a 401K?
In case you weren’t sure, a 401k is a retirement savings account that has to be set up by your employer allowing both you and your employers to make contributions. 

Not every employer will set up a 401k for you or contribute to a 401K account, so when you find a company that will do either (or both) of these steps, you should jump at the chance to use it. 

Why should you invest in a 401k?
When a company sets up a 401k for you, they’re making it so easy for you to start saving for retirement. And with any contributions they’re offering, it’s like they’re giving you free money from the company’s pocket. 

In most cases, your company makes it easy for you to contribute. They’ll help you set up automatic deductions from your paycheck that go directly into your account, so you never have to think about it. Depending on the type of 401k you have (Roth or traditional), you'll pay taxes on the funds before they're added to the account or when you withdraw the funds from the account, respectively. 

How can you get the most out of your 401k?
Maximizing your contributions can help you get the most out of your 401k. If your company matches your contributions in any way, be sure to take full advantage of this benefit. Without contributing the most money you can, you’re allowing company contributions to expire and opting out of receiving those funds. 

What if you change jobs?
Even if you leave your current job, you can either roll it into a 401k at your new job or move it to an IRA.

There are yearly limitations to how much you can contribute to a 401k, there are taxes, and there are limits to your employer’s contributions, but ignoring this investment opportunity could be a mistake you’ll wish you could take back. 

If you’d like to discuss your 401k plan in more detail, please contact the office.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.