By age 67, having roughly 10x’s your current income saved is a common goal to keep you at your current lifestyle. The question is can you afford to stash enough money now to reach that goal? Taking full advantage of your companies 401K plan is a good start. If your company offers a 401K as part of their benefit package, chances are there is a company match up to a certain % of your contributions, which can be very beneficial to take advantage of. For example, if your company match is 100% for the first 3% you contribute, their match is considered ‘free money. There are also limits on how much you can contribute to your 401K in a year. In 2021 the limit was $19,500 and in 2022 the limit is $20,500 if you are under 50. Since contributing to a 401K is pre-tax money, the contributions you make will reduce your taxable income – which is nice during tax time – but the question now is how much can you afford to take out of your daily budget? Should you be contributing more to your 401K – or should you be placing your money someplace else?

Before carrying out an extravagant saving plan, look at your whole financial picture. Do you have credit card debt with high interest? If it won’t be paid immediately & you still want to save – set aside a certain dollar or percentage amount daily, weekly or monthly. The annual amount saved can be significant. Do you have 3-6

months saved up for current living expenses for an emergency fund? Does your company offer disability or life insurance? Is a living trust or a will something you have researched? Is health insurance available to you or do you have to purchase it outside of your job? If married, what does your spouses’ company offer? Are kids in your future? Is buying a house one of your goals?

After assessing your current situation and see you have money to spare for investing in your retirement – the question is where to invest? Should you contribute more to your 401K? Does your 401K provider allow you to take out a loan? (Which is nice to use as a down payment for a house and then the repayment of the loan is deducted from your paycheck, and you pay the interest back to yourself.) Instead of adding more to your 401K should you open a Traditional IRA or a ROTH IRA? Should you investigate Exchange-traded funds? (ETF)

Your employer’s 401K plan may offer a limited number of investments or have higher administrative fees then the other options so while it is the most convenient way to save money you should research all the other investment options that are available in the marketplace.

The comments expressed and are for general information and not to be relied upon as financial advice. Please consult legal or tax professionals for specific information regarding your individual situation.