At What Age Should You Start Contributing to Your 401(k)?

At What Age Should You Start Contributing to Your 401(k)?

The cost of retirement has never been higher. Retirement planning before age 30 is highly recommended and before 40 is essential if you want to have an adequate balance between liquidity and assets later in life. The benefit of working with a retirement plan consultant is that you can take the guesswork out of retirement planning.

Making extra contributions to a 401(k) plan is the first step to boosting the total cash in your retirement fund. The earlier you start investing, the better off you will be. Your income may allow you to get a head start in your 20s, and your employer may even offer a matching benefit.

To assist in your retirement management strategy, you can adopt a 20-30-50 budget ratio. If you have significant debt, try to work toward a debt-to-savings ratio in which the savings number is higher than the debt number. Both of these ratios give you a healthy and achievable model for paying off debt and saving for retirement. By planning early, you can put time on your side to help pursue the nest egg you need to retire with financial health.

Another standard rule is the contribution to a 401(k) up to the employer match cap. The tax deduction benefits of an annual contribution to an Individual Retirement Account (IRA) is the other investment decision often made early on. Starting a Roth IRA account may help you to save more on taxes later in life. However, while building your retirement savings, don’t overlook the importance of maintaining a personal savings account so you have an emergency fund of at least six months worth of living expenses.

The Participant EffectSM is a guidance-based, beginning-to-end retirement service that can provide confidence in your financial life. Improve your financial security by talking to a retirement plan consultant about the dynamic investment accounts for your specific age. Many young investors are pleased to find out there is more to pension consulting than guidance on their 401(k). Request more information from The Participant EffectSM about other retirement investment portfolio options such as the 403b contribution plan by visiting  www.theparticipanteffect.com or calling us at 888-968-9168.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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