Most companies of any reasonable size offer a 401k retirement savings plan with some sort of company match. This means when you put money aside for your retirement, so does your company. Is it just me or is that not badass? Here is the scenario of someone learning the basics of a 401k. Check it out.
Person A: "Hey, I saw that our company offers a 401k plan. What the heck is that?"
Person B: "It's a plan that allows you to take money out of your check and set it aside for retirement. If you contribute to the 401k plan, our company will even give you some of their own money to help you retire richer."
Person A: "So you are telling me that if I put aside some of my own money, our company will give me some free money to help me out towards retirement?"
Person B: "yeah"
Person A: “What if I don’t want to contribute?”
Person B: "Well then you are dumb. Only idiots turn down free money."
Person A: "Ok. How do I get started?"
It’s as simple as that. My suggestion is to start your 401k plan as soon as possible. The earlier you start, the more free money you can get from your employer. I also recommend that you contribute as much to your 401k as your company will match. If you company matches up to 5% of your total pay, then put 5% into your 401k. If they match more, then put in more. Simple as that. Also remember that the most important part of your 401k is getting started, not necessarily about what investments you choose. So go grab someone from your work who has already setup their 401k and ask them to take 5 minutes to show you how to setup yours. You won’t regret it when it comes time for retirement. Trust me.
Fun Fact #1: 54% of 20-29 year olds eligible for 401k plans at work do not participate at all
Do you want to find out how much money you will save for retirement if you sign up for your 401k? Check out this calculator at Bloomberg's website.
Bloomberg 401k Calculator
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