Everything You Need To Know To Maximize Your 401(k) Balance

Retirement saving is an essential thing you should be considering throughout your career. It is expensive and requires you to have a lot of money saved and invested in your bank account. The most important thing to consider is the best strategy to maximize your 401(k) balance. Watch out for things such as taxes and fess and common mistakes that can substantial reduce this amount. Have a 401(k) plan that you can rely on, and leave room for errors which are often unavoidable.

Percentages matter

It is often hard to think as far ahead as your retirement when you first start working. Most companies will have a standardized rate of 3% of your salary that they will automatically deposit into your 401(k). Although this is standard, it is by no means the best option for you. For most, keeping your pre-retirement lifestyle requires you to save a lot more than this. Ideally, you should have a far larger percent saved. In fact, many financial advisors recommend that you begin by saving more than 3% and increase it by 1% every time you get a raise, eventually reaching an ideal rate of 20%. Meet with a financial advisor if you are not sure how much you should be saving. Remember, this will be different for every person.

Take advantage of match options

Many companies will offer to match 50 cents for every dollar that you are saving, up to 6% of pay. If your company offers something similar, you definitely want to take advantage of it. This is one of the most efficient and beneficial ways to increase your 401(k) balance. But know the details of this match. Your company will most likely have a policy that says you can only keep this match if you work there for a certain number of years, usually around 5 to 6 years. Plan in advance, know how long you’re likely to stay in the company. Are you miserable at your job? If so this might not be a realistic option for you.