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.
Next, consult your employer to see if they can match your contribution. Believe it or not, there are many places of work that match the amount that their workers save toward their 401k plans. What this means is that, depending on how much you put into your account, your employer will be able to match it. This is free money, in a sense, and it all but ensures that you get to retire sooner than you previously anticipated.
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.
Finally, at the end of each year, take the time to review your 401k plan in relation to your long-term goals. See how much money you've saved over the last several months. Do you feel like there's room to invest more money? Do you feel like you have to pull back on the amount saved from week to week? These are just a few questions to bring up during the review process. The time spent on this will make a considerable difference for your 401k.
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.
Next, consult your employer to see if they can match your contribution. Believe it or not, there are many places of work that match the amount that their workers save toward their 401k plans. What this means is that, depending on how much you put into your account, your employer will be able to match it. This is free money, in a sense, and it all but ensures that you get to retire sooner than you previously anticipated.
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.
Finally, at the end of each year, take the time to review your 401k plan in relation to your long-term goals. See how much money you've saved over the last several months. Do you feel like there's room to invest more money? Do you feel like you have to pull back on the amount saved from week to week? These are just a few questions to bring up during the review process. The time spent on this will make a considerable difference for your 401k.
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Contact Bob Jain if you would like additional information about what you have just read.. Unique version for reprint here: Bob Jain: 4 Tips For Getting The Most From Your 401K.
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