The first of 20 professional tips to help you save for your future

401(k) plans were created a little more than 40 years ago, when Congress passed the Revenue Act of 1978. Included in the Act was a new section in the Internal Revenue Code – Section 401(k) – that allowed employees to avoid paying taxes on contributions to their retirement savings from salaries, bonuses, and other forms of compensation.

401(k) plans were intended to help Americans to save more money for retirement. But can they also help more Americans actually retire early? We believe they can.

Shelton Pro-Tip #1:

Move as quickly as possible to capture the full benefits of a 401(k) plan.

  1. Value of Time.
    Nothing competes with compounding interest over time. Many 401(k) millionaires have contributed to their retirement plan for about 30 years and many don’t even earn six figure incomes! If you’re fortunate enough to have access to a 401(k) plan, take advantage as early in your career as possible.
  2. Reduced Taxes.
    Taxes likely take a huge bite out of a paycheck and we believe investing in a 401(k) is a great way to defer them. In practice, a contribution to a 401(k) reduces a portion of current income. Taxes on that deferred portion are paid when assets are withdrawn from the 401(k) in retirement. This scenario works best when the investor is in a lower tax bracket in retirement. Keep in mind, there is a 10% penalty on the account if funds are withdrawn before age 59½.
  3. Matching Contribution.
    Many companies provide a match of some sort to an employee’s 401(k) contribution. Learn about your company’s 401(k) program and start taking advantage immediately – don’t leave “free money” on the table.
  4. Imposed Discipline.
    Your financial savviness is likely to improve with exposure to more investor education and financial planning resources. Asking questions and seeking answers will lead to great financial habits and better management of your money and your future.

While starting to save early is one of the best things you can do to get the kind of retirement you imagine, you can plan for your retirement at any age. And there are plenty of great resources to guide you along the way — you never have to go it alone. We hope you’ll check out some of our resources at 

Here’s to a successful and prosperous year!