Saving for Retirement with a 401(k)

It can be very difficult to put aside your earnings for the years to come, especially when you might want to go to a football game, or buy a nice car, or travel the world. But at the same time, you really don’t want to be retired and living penny to penny. What’s one of the easiest ways to prevent this?  Open a 401(k)!

What is a 401(k)?

401(k)’s started out as the alternative to pension funds.  Pension funds had become too expensive for companies to give to their employees, so instead they offered 401(k)’s.  These retirement savings plans allow employees to set aside a portion of their paycheck before taxes are taken out and invest that money into mutual funds of their choice. Some employers will match the contributions you make to your 401(k).  Talk to your company to find out which type of 401(k) your employer offers and the rules that apply.

Why Open a 401(k)?

1) In the past, retirees have been able to rely on Social Security and pensions for funds, but now people are relying more on personal savings.
2) With inflation rates constantly fluctuating, the amount you have saved right now could mean little in the future. Make sure that you save enough to keep up with inflation.
3) Improved health care has allowed us to live longer, and because of this we need to save more. If you retire at 65 and live to be 100, that’s 35 years you need to save for.

How to Start Saving Now

Tax season is almost here, which can be very good for most of you if you play your cards right. Check out this USA Today article to learn “3 Ways to Cut Taxes While Saving for Retirement” and get a head start on saving!