Why investing money now could bring bigger returns on retirement accounts
Make sure you are maxing out any employer match in retirement plans
InvestigateTV - Compound interest is the key to building a solid retirement plan and investing money now allows that interest to have a greater impact on your investment over time.
Michael Joyce with the financial firm Agili, said if you get a raise or a bonus, increase your retirement contributions.
Joyce suggested that if it’s a 3% raise, increase your 401K contributions by 1% so you never miss that extra money in your paycheck.
“One of my favorite things is look at your 401K contributions or 403b contributions and if you’re not maxing out on that, just try to give 1% more,” Joyce said. “And then if that doesn’t hurt too much, then maybe increase another percent.”
He advised the goal is to get your contributions up to the 10% range of your salary.
Hist strategy: increase your contributions until it hurts. If you think you are at your threshold, add another percent and see if you really are. You can always contribute less if you find you need the money in your paycheck now. If your employer matches how much you put into your retirement account, at least make sure you are getting that match. Joyce said that’s free money, you should never pass up.
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