Are You Contributing Enough to Your 401(K)?
Once you set up your retirement plan at work, the next natural question is:
How much should I put in my 401(k)?
Keep reading to understand how tax implications, your employer match (if there is one), your own retirement goals, and more impact the amount you should contribute.
What Factors Should You Consider When Contributing to 401(K)?
1. The Tax Effect
The tax implications are important here because the money you contribute effectively reduces your taxable income for that year, and potentially lowers your tax bill.
2. The Employer Match
If your employer does offer a match, you likely want to save at least up to the matching amount, so you get the full employer contribution. It’s free money, as they say.
3. Your Retirement Goals
What sort of retirement do you envision for yourself? Even if you’re years away from it, it’s a good idea to sit down and imagine your future.
4. Do You Have Debt?
to read how your current debt situation impacts your 401(K) contributions.
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