Impact of Boosting your 401k Contribution

The 401K savings plan is a valuable instrument for saving money that you might otherwise not have. Certainly, having the money taken from your paycheck before you see it is less painful and easier, and truthfully, most people, left to their own initiative would not otherwise put much into their savings. Several factors need to be taken into consideration when deciding how much you choose to put into the account.

Even in the most uncertain economy, you can normally get some indication as to how much you will end up with at retirement from your account by contributing certain weekly amounts. First you need to decide how much you will be needing at retirement. This is determined easier by using a retirement or 401K calculator, that will give you some ball park figure as to how much money you will need and how much you may actually have. Inflation and other factors are also taken into consideration. Of course, this is determined by how old you are, as well, and how many years you have left until retirement. Other factors calculated include other savings plans you may have, what Social Security you can expect to collect, and what your retirement goals may be. In the long run, most people save very little in private savings, and Social Security supplies less than 50% of the pre-retirement income. Starting a 401K early in your career is usually the best plan, even if you sometimes hesitate to have money deducted weekly.

Most companies will match contributions up to a certain point, and it is always advisable to contribute the maximum you can, to take advantage of this match. In the long run, boosting your contribution to its best advantage will add up considerably. Ideally, once you have a 401K, you should be getting regular reports on your progress, estimates on how much you will have generated at retirement age, and suggestions for adding to your account to get even better results. The report may also suggest various investment options. How much you decide to add to your contribution also depends on how much you feel that you can afford to sacrifice from your weekly pay and still meet your immediate needs.

If you can spare the money, boosting your contribution, at any point in your working career will have an influence on the amount that you ultimately end up with, and how much extra you can count on in your retirement years.