Now more than ever, it is important to plan for your own retirement. While there may be some Social Security money available to you when you retire, it may not satisfy all of your monetary needs. It’s important that you think about retirement even though you may just be starting in your career.
With any type of retirement plan, your first step is to determine when you want to retire and how much money you think you’ll need. One of the most likely options available is a 401(k) offered by your employer. Most 401(k) plans allow you to grow your investment with little to no tax on the growth of the actual investment. Additionally, many employer plans will match your contribution up to a certain limit.
Here are some things to consider when contributing to your employer's 401(k):
1. When investing retirement money through an employer 401(k) plan, you may be subject to administrative fees. It’s always a good idea to reach out to your benefits specialist to make sure you understand exactly what costs are associated with this plan.
2. Many people do not like to contribute because the lack of control associated with an employer’s 401(k) program makes them uncomfortable. Simply put, you may not have the flexibility to control your investments within your employer's 401(k) program.
3. There is a potential tax penalty associated with 401(k) plans if you attempt to access these pre-tax investments before you reach retirement age.
Do your homework! Find out what your employer is offering and speak with a financial planner and/or tax advisor to help set up the right strategy for you. To find one of our financial representatives, click here.
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