Do you have a 401(k)? If so, do you know how to make it work
for you? 401(k) plans are very beneficial for just about everyone who has one,
but they can be even more beneficial if you know a few tricks of the trade.
Contribute Constantly
The first tip to making the most of your 401(k) is to
contribute to it regularly. Every single time you earn a paycheck, you need to
be putting at least a small part of it, even if it’s as low as 2%, toward your
plan.
2% might not seem like much, but if your employer matches
it, you’re already making some nice headway. Even if your employer doesn’t,
socking away a little something is better than socking away nothing!
Don’t Touch It!
Unless you face a dire emergency and have no other way to
get the money you need, withdrawing from your 401(k) should be a huge no-no.
Pre-retirement withdrawals come with major penalties, and other than in extreme
cases, it’s just not worth it.
Remember, the longer you can go without touching the funds in
your 401(k), the more your money grows. Have other backup plans in place for
those “need money now” situations and only touch your 401(k) when there is
absolutely no other option.
Take Taxes into Consideration
Finally, don’t forget that any
contributions you make to your 401(k) utilize pre-tax funds. So, when you
contribute, you’re actually lowering your taxable income and the costs
associated with it.
Also, be aware that you may be able to enjoy a retirement
savings contributions credit as a reward for having your 401(k). If you’re
eligible, that could mean nice benefits, but, even if you’re not, using your
401(k), and more importantly, using it wisely, is always a good idea!
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