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.

BUT FIRST...

How much can you contribute to a 401(K)?

2022 vs 2021 401(K) Contribution Limits For 2021 the contribution limit is $19,500, with an additional $6,500 catch-up provision for those 50 and older, for a total of $26,000.

2022 vs 2021 401(K) Contribution Limits For 2022, you can save up to $20,500 in your 401(k). The catch-up amount is unchanged at $6,500, for a total of $27,000 if you're 50 or over.

AND NOW...

How Much Should You Put Toward a 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.

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