{"id":1163,"date":"2011-04-19T06:55:19","date_gmt":"2011-04-19T11:55:19","guid":{"rendered":"http:\/\/www.billlosey.com\/?p=1163"},"modified":"2011-04-19T06:55:19","modified_gmt":"2011-04-19T11:55:19","slug":"3-reasons-to-max-out-your-401k","status":"publish","type":"post","link":"https:\/\/billlosey.com\/knowledge-center\/3-reasons-to-max-out-your-401k\/","title":{"rendered":"3 Reasons To Max Out Your 401k"},"content":{"rendered":"<p>Do  you have a million dollars? At the moment, probably not. But if you  invest and save diligently and let your assets compound, who knows? You  may be a millionaire someday. In fact, you may <span style=\"text-decoration: underline;\">need<\/span> to be a  millionaire someday. If you stay retired for 20 or 30 years \u2013 which  could happen \u2013 it could take well over $1 million to fund that  retirement. In fact, a recent study of Registered Investment Advisors  recommended retirement assets of $1.5 million or more for baby boomers.  This is why you should contribute the maximum to your 401(k) plan.<\/p>\n<p><strong>Your 401(k) is your friend. <\/strong>For  years, employers have wondered: why don\u2019t people contribute more to  their 401(k)s? At the typical large company, the majority of employees  contribute too little, and some find it a hassle to even fill out the  paperwork. Most people don\u2019t speak \u201cfinancial\u201d and don\u2019t look at  financial magazines or websites. It\u2019s \u201cboring.\u201d So they mentally file  \u201c401(k)\u201d under \u201cboring.\u201d But the advantages of a 401(k) should not bore  you; they should motivate you.<\/p>\n<p><strong>Tax-deferred growth and compounding.<\/strong> The money in your 401(k) compounds year after year without tax  penalties. The earlier you start, the more compounding you get. Let\u2019s  say you put $2,400 annually in a 401(k) starting at age 30, and for the  sake of example, let\u2019s assume you get an 8% annual return. How much  money would you have at 65? You would have a retirement nest egg of  $437,148 from putting in $200 per month. But if you started putting in  that $200 a month five years later, you would have only $285,588. You  can put up to $16,500 into a traditional or \u201csafe harbor\u201d 401(k) in  2011, and if you turn 50 or are older than 50 this year, you can put in  an additional $5,500 in \u201ccatch-up\u201d contributions. You can contribute up  to $11,500 to a SIMPLE 401(k) for 2011, with \u201ccatch-up\u201d contributions of  up to $2,500 if you are 50 or older. These annual contribution limits  are indexed for inflation.<\/p>\n<p><strong>Potential matching contributions. <\/strong>Who  would turn down free money? Big companies will often match an  employee\u2019s 401(k) contributions. Usually, the corporate match is 50\u00a2 for  each dollar up to 6% of your salary.<\/p>\n<p><strong> <\/strong><\/p>\n<p><strong>Reducing your taxable income.<\/strong> Many employees don\u2019t recognize this benefit. Your 401(k) contributions  are pulled out of your wages before taxes are withheld (pre-tax  dollars). So you get reduced taxable income and tax-free growth; you pay  taxes on 401(k) assets when you withdraw them from the plan. With the  new and increasingly popular Roth 401(k), the contributions are  after-tax (no reduction in taxable income), but you can enjoy both  tax-free compounding and tax-free withdrawals.<\/p>\n<p><strong>Why not take advantage? <\/strong>If  you don\u2019t contribute greatly to your 401(k), 403(b) or 457 plan, you  are ignoring a great retirement savings opportunity. Talk to your  financial advisor about your 401(k) and other great resources to save  for retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Do you have a million dollars? At the moment, probably not. But if you invest and save diligently and let your assets compound, who knows? You may be a millionaire someday. In fact, you may need to be a millionaire [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1163","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/1163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=1163"}],"version-history":[{"count":0,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/1163\/revisions"}],"wp:attachment":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=1163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=1163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=1163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}