Maximize Your 401(k) Fund

Without a doubt, you want to save as much as you can for retirement, and you’re probably already contributing to your company-provided 401(k) fund. But you may still be uncertain of whether you’re saving enough, or if you could change your strategy for the better. The following methods can help you to maximize your savings, and could make a big difference in your lifestyle once you retire.

Take advantage of employer matching. If you employer offers matching funds, then contribute enough to your 401(k) to reach the maximum match each year. Matching funds are like free money, so take advantage of every bit that you can!

Contribute beyond your employer’s match. Most companies establish a limit for the amount of funds they match, although that amount can vary from one employer to the next. But if your contributions plus your employer’s matching funds still don’t equal the maximum amount you’re allowed to contribute each year, consider increasing your own contribution. No, it won’t be matched by your company, but you can still take advantage of various tax benefits.

For 2015, the maximum tax-deferred contribution is $18,000. If you’re aged 50 or older, you can contribute an extra $6,000.

Tax-deferred means that you don’t pay taxes on the money you contribute to your 401(k). This lowers your overall taxable income by that amount. If the result is a big tax refund, consider saving that for retirement and really boost your savings!

Increase your contributions according to your salary. Let’s say you get a raise at the beginning of the year. Increase your 401(k) contributions by half of that raise. Your paychecks are still bigger, so you can enjoy the rewards of your hard work. But you’ll also be putting away more money for retirement. You probably won’t miss the money now, but later you most likely will be glad you made this decision.

14100 – 2015/2/13