Market Watch recently updated their Average 401(k) Balance By Age.
How Your 401(k) Works
Are you confused about your 401k plan and how it can benefit your financial future? You're not alone. Let’s start with the basics of what a 401k is. Put simply, a 401k is one of many retirement savings plans available. It is typically sponsored by an employer to help employees save for retirement.
One key advantage of a 401k plan is that contributions may be made with pre-tax dollars, lowering your taxable income. Your contributions to a 401k plan are typically deducted directly from your paycheck. Employers may also match a percentage of your contributions, which is essentially "free money" towards your retirement. You can choose how your contributions are invested, usually in a mix of stocks, bonds, and mutual funds. These investments have the potential to grow over time, helping your savings accumulate. To estimate how much might accumulate you can use the free U.S. Securities and Exchange Commission (SEC) Savings Goal Calculator and/or Compound Interest Calculator.
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