How to Start Saving?
Participating in a 401(k) plan through your employer is often the easiest way to start setting money aside for the long term. Most employers looking for high-quality employees offer a 401(k) plan as a benefit to help retain talent.
Contributions
According to Forbes: Let’s assume you earn $40,000 a year and contribute 10% to your 401(k) plan, receiving an employer matching contribution of 3% and an average annual return rate of 6%. If you start at age 22, you could end up with over a million dollars by the age of 65. But if you wait until 30 to start saving, you might end up with only about $617,000. Starting early means the possibility of having over $300,000 extra in your retirement account, which means you can retire earlier or live better in retirement.
Allocations
The benefit of starting to save and invest when you’re in your twenties and thirties is not just that you have money for retirement. You can also take on more risk and potentially achieve higher returns, as your saving time is long. When options for allocating your investments in a 401(k) are presented, look for an 80/20 allocation between stocks, which are typically more profitable but more volatile, and bonds, which are stable but have lower returns.
Don’t Wait Because of Debt
There are 44 million Americans in the process of repaying student loans, so if you have debt to pay off, you’re not alone. Don’t make the mistake of waiting until after you’ve paid off your loans to start contributing to a 401(k) plan. Plan your expenses carefully and look for opportunities to pay down your debt, especially if you can automate those payments through payroll deductions just like you do with 401(k) contributions. Paying off loans while saving won’t be nearly as difficult as you might think.
Saving for the future is just as important as paying off debt from the past. You’ve invested in your education, and now you need to invest in your retirement.
Source: https://www.thebalancemoney.com/opening-a-retirement-account-4155872
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