If you have been researching retirement planning advice recently, you know that many experts believe the cornerstone of planning for retirement is to invest in a 401k retirement account. Many adults have access to a 401k account through their employer's benefits package. However, independent 401k accounts are also available through some banks and financial institutions. While most retirement planning experts agree that you should be contributing regularly to your 401k account, a common question involves how much you should be contributing on a regular basis.
Employer-Matching ProgramMany employers that offer a 401k plan also have an employer-matching program in place. The matching benefit varies from employer to employer. Some employers may match your own contributions dollar for dollar up to 3 percent of your income. Others may match half of your contributions up to 2 percent of your income. Regardless of the structure of the matching program, it is in your benefit to fully take advantage of this program. Employer contributions essentially provide you with free money that can grow over time and be used for retirement purposes.
Should You Contribute More?While many people do faithfully contribute money towards their 401k plan, a common concern is if they are contributing enough money or too much. These are funds that can only be withdrawn without penalty after you reach the age of 59 _. What if you want or need access to money before you reach this age but have saved the bulk of your money in your 401k plan? The key to a successful retirement is to plan for your goals. This involves defining what your goals are. Saving regularly is great, but you should define your goals in order to determine if you are on track for enjoying the retirement you want. While funding your 401k plan is important, diversifying your assets is also important. Consider your options for diversifying with a Roth IRA, real estate investments, CDs and more in combination with your 401k in order to fund your retirement plans. Keep in mind that there is not a magic number that every individual will want saved in his or her 401k account. Instead, there is a balance that should be reached that is unique for each individual based on specific retirement goals.
Although the amount you may contribute to your 401k varies by year, in 2012 one could contribute up to $17,000 to their 401k. Remember that one's employer may not match your contribution up to this amount.
The maximum amount that you can contribute to your 401K plan is 50% of your taxible wages. If your Employer has a "match" Program They Will Contribute a Mirrior 50% with yours
yes
You should have $260,000 in when you are 40.
You can contribute to both a 401K and an IRA at the same time (same year).
Although the amount you may contribute to your 401k varies by year, in 2012 one could contribute up to $17,000 to their 401k. Remember that one's employer may not match your contribution up to this amount.
You should know how the financial institution intends to invest your money. Also know how much your employer will match so you can contribute the maximum.
The maximum amount that you can contribute to your 401K plan is 50% of your taxible wages. If your Employer has a "match" Program They Will Contribute a Mirrior 50% with yours
You can contribute to a Roth IRA after age 70.5 as long as you have earned income, but you cannot contribute to a traditional IRA after that age. For a 401(k) plan, it depends on the rules of the specific plan, but typically you can continue to contribute to it past age 70.5 as long as you are still working and the plan allows for it.
yes
CNN Money has a guide to retirement that would be very helpful. They have all the information you will need on 401k plans. They explain how much you can contribute, whats a matching contribution and much more.
You should have $260,000 in when you are 40.
You can contribute to both a 401K and an IRA at the same time (same year).
Having a good plan and knowing exactly how much you can afford to contribute to your 401k are two essential steps towards setting up your account. Fidelity and Meryl Lynch both have great plans. You should also ask your employer about a plan!
In a 401k roth plan a person can decide to contribute before or after taxes, which is not available in a regular 401k. This can be very beneficial to some people.
Yes the employer usually has a limited amount that they will match depending on the amount that you contribute to the 401K plan.
Always contribute what your employer will match, but consider contributing up to 10% of your income if you can afford it.