Saving the maximum possible in a 401(k) is a wise goal for most, but tough to reach for many.
However, maximizing your 401k account isn’t as far out of reach as many think. Forbes has some tips that we wanted to share to help you increase the contributions you’re making to your plan each year.
Get Your Employer to Contribute
Make sure you contribute enough to get matching contributions from your employer. If they stopped their contributions during the recession, ask them to reinstate them now.
Don’t Treat Raises and Bonuses as “Extra” Money
Put any extra you earn into your 401(k) instead of treating yourself with what might feel like“free” money.
Change Your Contribution Rate Mid-year
If you’re not due to add enough to your fund, think about bumping it up. Most employers should let you.
Consider a Roth
Contributions are taxed and retirement withdrawals are tax-free. Particularly worthwhile if you’re relatively young.
Avoid a Loan from Your 401(k)
The risks of taking a loan from your 401(k) are great. We’ll go over this again in more detail tomorrow.
Don’t Mistake the “Hardship” in “Hardship Loan”
Non-taxable loans from your 401(k) are allowed if you’re in foreclosure proceedings but be careful – many “hardships” don’t qualify.