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Retirement savings pump up

Lessons To Pump Up Your 401 K Retirement Dollars

Here are a few tips to remember when building your retirement dollars:

1. Start stashing away money early
Beyond the obvious fact that the longer you save, the more you’ll potentially accumulate, contributing steadily over 30 to 40 years is especially beneficial in a tax-advantaged workplace retirement plan. This is because your money has an opportunity to grow more through the favorable tax treatment. You pay taxes on distributions from your 401(k)—which includes taxes on any interest earned from your contributions—in retirement.

2. Contribute a minimum of 10% to 15%
Contributing 10% to 15% might sound like a lot, but that amount is meant to include contributions from your employer—such as your company match or profit sharing. If you cannot contribute as much as 10%-15%, stay consistent and keep contributing.

3. Meet your employer match
You’ve probably heard it many times, but it bears repeating that failing to contribute up to the full amount of a company match is like turning down “free” money. Today, 96% of 401(k) participants are in a plan that offers some type of employer contribution, but not all of them take full advantage of the opportunity.

4. Don’t cash out when changing jobs
Taking a distribution from your 401(k) account when you change jobs is hardly ever a good idea. It could trigger significant tax liability and early withdrawal penalties. When you take money out of your 401(k), you lose the opportunity for it to grow. Even if you’re early in your career and your balance is relatively small, it’s usually a better idea to keep your 401(k) money with your old employer, or transfer your 401(k) to your new employer’s plan or into a rollover IRA.

Source: – Five habits of 401(k) millionaires

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Let me help you keep your retirement money safe.  Contact me today for a free consultation so we can evaluate your retirement strategy. Toll Free: 1-866-471-7233 | MD, VA & DC.