- 401k

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401k...

Tax Free Savings - make it an automatic payment out of every check you receive and you won't even miss the money.

How it works

salary of $50,000

tax rate 30%

take home pay $35,000 or $2,917 per month

$520 per month into 401k

the $520 you put into your retirement account comes off the top

your taxable income dropped from $4,167 a month to $3,647

$3,647 taxed at 30% leaves you with take home income of $2,553

before you were taking home $2,917

the difference is only $336 per month NOT $520

How much is this worth to you in the long run?

at 40 years old

$520 per month

10% average return

at age 65 or in 25 years your total contributions cost you around $100,000 in reduced take home pay

you totaled in retirement savings $689,953 nearly 7 times as much as you put in!

*** many employers match a percent of what you put in - take advantage!

*** even better is your self employed - the government gives business owners the best tax breaks when it comes to retirement accounts - SEP IRA or One-Person 401k

*** automate the process, a simple way is to open a self-directed retirement account

Don't know where to start? try Fidelity.com

 

next - 401k Investments

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