This guide is all about getting free money through the best retirement plans and savings programs. We’ll cover five programs, how to set each up and how to get the most out of your money.
If instead of investing through a regular account, they invest through a 401K, IRA or other retirement account – the money gets taken out of their check before the income tax deduction.
It gets even better with a company match on a 401K account. Say your employer matches 50% so they add $29 (50% of your $58 pre-tax investment). Now you’ve got an investment worth $88 for an immediate 76% return!
Let’s start with the most common type of retirement account, the 401K plan sponsored by your employer. We’ll cover the basic 401K facts here and why it’s your first choice in retirement accounts.
A 401K is a retirement account set up by your employer that allows you to automatically deduct money from your paycheck before taxes are taken out.
Over 20 years, the 401K participant is going to see their retirement account grow to almost $154,000 assuming an 8% annual return while not contributing to the 401K plan would leave the account with just $111,000 over the same timeframe.
Employers contract with 401K providers, investment companies, to offer you the plan. You’ll usually be able to select from a list of plan providers and a representative will help you fill out the paperwork.