Tomorrow doesn't work, my fair ladies. The day to start contributing to your 401(k) if you didn't yesterday is TODAY. Here's a quick list of reasons to call your benefits office, pronto:
1. You benefit from the incredible power of compounded returns over time. Your investments work just like you do! (This is akin to burning calories while you sleep, but much better :)
2. You lower your tax burden. 401(k) contributions are taken from your gross earnings so if you earn $100,000 and contribute the max ($15,500), you are taxed as though you earned $84,500.
3. There's often an employer match. Sometimes it's a 5% of your salary add-on, at other times another figure, and often you have to be with the employer for a period of time, but the point is, not contributing means walking away from free money! Would you pass up a several thousand dollar gift certificate? Then don't do it with the employer match at work -- we're talking thousands of dollars!
4. You're farther from trying to subsist on social security payments. Have you ever checked how much money you can expect? (A HMW likely has neither the time nor the care to do this, so I did it for you.) I went onto the SSA website, entered in a 30 year-old who makes $100k and plans to stop working in 2048 (ugh!), requested the payment in today's dollars (not inflation adjusted) and found out she'd receive a whopping $2900. Can you live on that each month? I think not -- that's my rent plus a few extras!
5. You'll likely barely miss the money. Twenty more lattes or another few pairs of Choos versus the sound sleep you'll get seeing that statement growing every quarter.
So do this: a lot of you will be getting raises in the coming weeks. Challenge yourself to at least putting that much more in your 401(k) next year. I promise it will be the gift that keeps on givin'! AND keep you one step farther from ended up like cousin Eddie :)
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