Should you agree with your employer on instant 401K?

Should you agree with your employer on instant 401K?


Most people in the USA and abroad are regretting not starting to save for the retirement in their twenties. It is getting harder to save money at an older age when you have a mortgage, auto expenses, kids adding to college etc.

Find for yourself what kind of retirement suits you?

  • You want to travel the world or go for frequent vacations.
  • Have quite evening at home with your spouse.
  • Support your kid’s education.
  • Dream to come true like owning a boat or playing golf daily.

If you have a dream- great, but most young people do not know exactly what they want, so think about doing more and for sure you will have if you’ll do less. Also, life will take you to new paths and your needs, priorities, and goals will change over the years.

Congratulation on your new job. More employers than ever are now making this decision for you by signing you to the 401 K plan. Most 401 K plans allocate part of your earning based on your age and income level. The vast majority of new employees are thrilled thinking they are on the right path for retirement savings and do not put a second thought to the issue.

The good thing is that your employer is helping you get started with your 401K saving plans for retirement.

The way these instant plans are usually set up- Are Not a good deal for you.

Most employers allocate 3-4% of your paycheck for the 401K plan. While it is a start, it won’t get you far when you will be 62 or 65 years old. Even with your employer matching amount.

Do not forget that money will grow faster over the later years and the longer you have the 401K plan with more money, the faster you will reach your goal.

Well, How Much Should You Put In Your 401K Plan In Order To Retire Comfortably?

Look at your employer matching amount and find out what it the maximum they are willing to contribute to yours. If your employer is willing to match your contribution up to 6%, then it is your minimum to start but whether the company will go higher or not, you will need to increase your contribution to making up for the difference. At an older age you need to be at 15-20% of your earning because the money won’t grow as fast as you are young.

There is always the question of how much should I put in my 401 K plan?

  • How much do I need to take home to cover expenses?
  • Can I cut some of my expenses? Which is always a good thing to check.
  • Can I live by allocating 5% to my 401 K Plan?

Your company means well, and it is great that they offer a 401K plan but you should take your future in your own hands and set your contributions for a 401K plan to a higher amount, yet enough for you to live comfortably. After all, life is short, and you should enjoy life responsible at any age.

As you grow and get more financially stable to think about adding income real estate investments to your portfolio. We will publish an article about residential and commercial real estate investment soon.


Happy Retirement, Good luck!


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