Regardless of where you work, it is becoming increasingly hard to save money. More people are living paycheck to paycheck which makes it almost impossible to save for retirement.That is especially true for those working for companies that do not have automatically withdrawn 401 K plan options. However, just as work is part of life, living well during retirement is also a priority.
401K retirement plan
is an account that allows employees to save a portion of their pre-tax income through automatic payroll deductions. There are many benefits to 401K accounts including:
Employer Contributions
As a business, one way to save money on taxes is by offering to match contributions that employees make into their 401 K accounts. That means that if an employee deposits a certain percentage of their pay, an employer will match up to a certain amount, often 3-5%. Therefore, the employee is able to save more than just their payroll deduction.
Tax Advantages
One of the primary benefits of a 401 K retirement plan is that contributions are made pre-tax. In addition to lowering a person’s tax bill, gains made to a 401 K account are tax-deferred.
Automatic Savings
Payroll deductions made into an account create an automatic savings account for retirement.
Other benefits include the opportunity to roll over a 401k if you change jobs and allowing you to choose investment strategies for your money.
For those not working a typical job or whose job doesn’t offer 401 K deductions, self-employed or gig workers, there are self-directed 401 K account options available. Those account holders are responsible for making their own deposit and investment decisions.
Hard work is part of life and so is living well during retirement. There are lots of savings options available, including the 401 K retirement plan.
