Audit your résumé and see if you have any retirement accounts collecting dust. It may be surprising, but it's not uncommon for people to forget about 401(k) plans from previous jobs. And if you get a bonus or another unexpected windfall, consider setting aside at least a portion of it for your retirement savings. That might mean opting to increase your 401(k) contribution rate by 1% each year or whenever you get a raise. But remember that 15% also includes any percentage that your employer matches, and you're able to start small and work your way up to contribute more. That 15% can seem like a huge amount to save for retirement, particularly when you're just starting out. Working toward saving 15% for retirement.Each dollar your company contributes is one that you don't have to. It's a good idea to contribute at least enough to get your full 401(k) match. There is also often a cap on the amount the employer will match, such as 6% of your total pay. Often, this match is 50 cents or $1 for each dollar your employee contributes. The formula used to determine 401(k) matches varies by company. Taking full advantage of any 401(k) matchĪ 401(k) match is a special benefit your company puts into your 401(k) based on what you contribute.when your investment returns earn returns of their own. That's because the longer your money is invested, the longer it has to benefit from compound interest, a.k.a. Starting to save as soon as you can is one of the keys to a successful retirement. To get the most out of your 401(k), make sure you're: How to maximize your 401(k) contributions If yours doesn't- or you simply want to save even more than after-tax contributions alone allow-there are other strategies to consider, like an IRA. Keep in mind that not all 401(k) plans allow for these after-tax contributions. For example, if you were under 50 and contributing $22,500 and your employer was contributing $20,500 in 2023, you could contribute up to an additional $23,000 as after-tax contributions to bring your total to $66,000. That means that while your after-tax contributions have the potential to benefit investment growth while they're in your 401(k) account, you may still have to pay taxes again on that money when you withdraw funds in retirement.ĭepending on your plan, you may be able to contribute up to the total employee and employer contribution limit for the year, provided your existing employee and employer contributions do not exceed the limit. If you reach the maximum that you can contribute to your 401(k) as an employee, you may be able to save more for retirement in your workplace plan through after-tax contributions.
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