Investing in your employer retirement plan is worth it!
How many people really pay attention to their retirement plan at work? Better yet, how many people actually know the benefits available to them at work? The traditional 401(k) savings plan in this country has often been considered a given in any current employment relationship, yet few employees truly understand how important this can be as you prepare for the future.
As of 2018, the average retiree in this country has amassed a 401(k) account balance of $161,000. Based on traditional withdrawal rates, this buys you 3-5 years of income in retirement. Also, as of May 2019, 25% of adults in this country have absolutely no retirement savings. Both of these issues have the opportunity to be hedged though – all we have to do is circle back to that retirement plan at work.
Benefits of Investing in Your Employer’s Retirement Plan
First off, participating in your retirement plan at work has the ability to lower the amount of taxes that comes out of your paycheck because contributions are taken out before taxes or deductions are. This often means that the net effect of participating will not affect your net pay as much as you think. Also, many employers offer an incentive for participating called an employer match. Many employees don’t take full advantage of this match. This is free money! Take the market and investments out of the equation, and this is an opportunity to double or even triple your money without any risk. It is an earned benefit and a good thing that your company offers. Take advantage of it!
Lastly, many plans offer a Roth option, which is rarely used in American retirement accounts. See if it is right for you. This option allows for after-tax contributions to be made, which have the ability of growing tax-free over time. If you can put some years into utilizing this strategy, you can really build a nest egg that has no tax liabilities for you in your retirement years.
Take advantage of these benefits as there is truly no guarantee to what social security is going to look like when you retire. It is on you to make sure that you are prepared to live the retirement you want!