Saving money is not for suckers; I don’t care what Dame Dash says. In the real world many of us have jobs and we are employed by companies that help to provide the means to support our families and ourselves. Making the right decision when it comes to choosing a career comes down to a few things; money, personal fulfillment, legacy and (drum roll, please) benefits.
A 401K is probably the most popular of these benefits, because of what it means to retirement and your way of life once you make the decision to leave the workforce.
Many people have heard of a 401K, but what is it exactly?
A 401k is an employer sponsored retirement plan. A specific amount is automatically deducted from an employee’s paycheck before taxes have been removed and this money is placed into a fund. Most companies have a preferred fund that they use, however employees can have flexibility as to how their money is invested based on their risk tolerance. There are employees who match contributions and this can prove to be valuable when you retire.
It is important to research specific fund families to determine which one will benefit you. Do not hesitate to reach out to a professional financial adviser for guidance. Most banks have someone on staff that can help you make the proper decision. Choosing the right fund to invest your pre-tax dollars can mean the difference between traveling to Paris, France, and Paris, Texas, when it’s time to retire.
The money that you invest is not subject to federal taxation until it is withdrawn. This serves as a great tax shelter and a very powerful way to save money.
If you have the opportunity to invest in a 401K, take advantage of it, ’cause if you don’t you might really be a sucker … just kidding … but not really.
Do you have a 401K? Does your company match your contribution? How do you feel about it? Sound off in the comments.
Eddy Precise Lamarre
Eddy “Precise” Lamarre has over 10 years worth of experience in banking and is also an performing artist, blogger and motivational speaker.
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