– When you start a new job and sign up for your company's 401(k) plan,
– you will need to decide how much to contribute to the account.
– This seemingly simple decision will affect how much is withheld from your paychecks,
– your annual income tax bill and how much money you will have in retirement.
Here's how to determine the amount to save in your 401(k) plan:
– The 401(k) contribution limit is $22,500 in 2023.
– Workers age 50 and older can contribute an additional $7,500 in 2023.
– Qualifying for a 401(k) match is the fastest way to build wealth for retirement.
– Many financial advisors recommend saving more than 10% of your income for retirement.
– Remember to increase your savings rate over time.
– Starting to save at a young age gives your investments more time to compound.
– Maxing out your 401(k) helps reduce your current tax bill.