For the uninitiated, a 401k is a retirement savings plan that allows you to consistently save until the day you no longer have to work. Money is regularly taken out of your pay in order to support the plan in question, and it takes several years for it to truly build. You might have a 401k being built right now, but how do you know if you're getting the most out of it? To maximize it, here are 4 methods to consider, courtesy of Bob Jain.
According to authorities on finance like Robert Jain, you should contribute more to your 401k with every pay raise you receive. While you don't have to contribute your entire raise to each month's savings, the truth is that a little more can go a long way. This is especially true if you remember that a 401k has to be built over the course of several years. Don't let your raises go to waste; invest them wisely in this plan.
Another way to get the most from your 401k is by consulting your employer to see if they can match your contribution. For example, if you invest about 5% of your biweekly pay into your retirement savings account, your employer may match it. What this means is that you get an additional bonus that you can use toward your 401k. Even if you're under the impression that your workplace won't allow this, it doesn't hurt to ask.
What if you find yourself in a position where you need money fast? Dipping into your 401k savings may be the worst thing that you can do, as it can severely impact your savings in the long-term. It also doesn't help that you are liable to be penalized, meaning that you might have to pay back more than what the money you take out is worth. An important rule to remember is to forget that you even have a 401k. It makes saving up for retirement that much easier.
Lastly, if you are truly focused on getting the most out of your 401k plan, make it a point to review your progress at the end of the year. This will give you the opportunity to evaluate the progress you've made, not to mention implement any changes that you see fit. These could relate to savings, meaning that you might increase or decrease them depending on your financial situation in general. Whatever your goals entail, a review session at the end of the year is recommended.
According to authorities on finance like Robert Jain, you should contribute more to your 401k with every pay raise you receive. While you don't have to contribute your entire raise to each month's savings, the truth is that a little more can go a long way. This is especially true if you remember that a 401k has to be built over the course of several years. Don't let your raises go to waste; invest them wisely in this plan.
Another way to get the most from your 401k is by consulting your employer to see if they can match your contribution. For example, if you invest about 5% of your biweekly pay into your retirement savings account, your employer may match it. What this means is that you get an additional bonus that you can use toward your 401k. Even if you're under the impression that your workplace won't allow this, it doesn't hurt to ask.
What if you find yourself in a position where you need money fast? Dipping into your 401k savings may be the worst thing that you can do, as it can severely impact your savings in the long-term. It also doesn't help that you are liable to be penalized, meaning that you might have to pay back more than what the money you take out is worth. An important rule to remember is to forget that you even have a 401k. It makes saving up for retirement that much easier.
Lastly, if you are truly focused on getting the most out of your 401k plan, make it a point to review your progress at the end of the year. This will give you the opportunity to evaluate the progress you've made, not to mention implement any changes that you see fit. These could relate to savings, meaning that you might increase or decrease them depending on your financial situation in general. Whatever your goals entail, a review session at the end of the year is recommended.
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Contact Bob Jain if you'd like additional advice about what you've just read.. Also published at Bob Jain: 4 Tips For Getting The Most From Your 401K.
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