401(k) Professional tips to help you save for your future – 6 of 20

Achieving your retirement dreams will not happen by accident. In order to live the retirement lifestyle you dream about, you have to start saving. Your company’s 401(k) plan can be one of the best tools available to help you to that end.

Shelton 401(k) Pro-Tip #6:

Learn the Benefits in Participating in an Employer-sponsored 401(k) Plan

Chances are that you have heard about various 401(k) benefits by now, but you might not understand exactly how a company-sponsored retirement plan can help build your financial future. We might suggest that the more you know about 401(k)s, the more you will be able to take advantage of those 401(k) benefits.

Recent estimates indicate that more than 80 million workers actively participate in company-sponsored retirement plans around the country, so you may already be participating in a 401(k). Let us give you four good reasons for you to fall in love with it:

  1. The amount that you contribute to your 401(k) is tax deductible. Contributions to a traditional 401(k) are taken directly out of your paycheck before federal income taxes are withheld. This pre-tax withdrawal lowers your total taxable income which means you might owe less in income taxes, regardless of whether you itemize or take the standard deduction.
  2. Plan earnings are tax deferred, which can accelerate your gains later on. Dividends and capital gains that accumulate inside your 401(k) are not subject to tax until you begin withdrawals. The tax treatment can be a significant benefit if you’re in a lower tax bracket in retirement.
  3. Your employer could be contributing to your plan. Many employers offer to match the amount you contribute to your 401(k) plan. If your company offers a 401(k) match feature, sign up as soon as you can — it essentially represents free money.
  4. Your money goes straight from your paycheck to your retirement account. With a 401(k), you can make automatic contributions directly from your paycheck. Since the deduction is taken before you get paid, you’ll be less likely to miss the money.

By joining your company’s retirement plan, you gain a wide range of benefits to help you take control of your future. And the process doesn’t have to be complicated — there’s a wealth of advice available to you on how to start and manage your plan. Check out Shelton’s library of 401(k) Educational Videos to help you make good choices and stay on a good retirement track.

Here’s to your success!