Wednesday, January 17, 2007

Time to Increase 401(k) for Retirement

It's time. I've been thinking about increasing my 401(k) contributions, but I've been putting it off.

I have other goals - goals that I want to accomplish as quickly as possible - so it's been easy to ignore retirement savings since we are decades from retiring.

Everyone wants to think about the "now" not the "later". It's human nature, and I'm no different than anyone else when it comes to that.

But, when I think of the lost opportunity of NOT taking advantage of saving
Pre-Tax dollars, my frugal heart skips a beat. That's a lot of money we are letting slip through our fingers, folks.

For example, let's say you make $20,000 a year before taxes. *That puts you in the 15% tax bracket. You want to save 10% of your income for retirement. In pre-tax dollars you will save $2000 each year.

But, if you don't put that money in a tax deferred account like a 401(k), you will only save $1700.

You've just lost $300 - plus all the interest it would have generated.

It's gone forever.

It belongs to the government now.

Are you happy with that? Three hundred dollars is a lot of money to just give away, don't you think? Especially when it's going to the government. They already have enough of our money.

So, I am going to just bite the bullet and increase my 401(k) deductions. In take home pay, it will only decrease our income by a few dollars a week.

How about you? Are you ready to stop letting the government take such a big mouthful, and keep more of your own hard-earned money?

*These tax calculations have been simplified. For a more detailed explanation of your tax bracket, I recommend Moneychimp

1 comment:


Always a good idea to put some money away.