401(k) Participate or Not???
Do you participate in your companie's 401(k) if you are eligible?
Do you ever ask yourself "What are the advantages of participating in a 401(k)?" Here a just a few things to think about..
It's painless. Your employer automatically deducts your contributions every time you are paid. You don't need to remind yourself to write a check.
You get free money with an employer match. Many employers matches up to 3% of your contribution
You get two tax breaks when you save in a 401k plan. First, your contributions are tax-deductible. The money you contribute doesn't count toward your gross income for the year, lowering your taxable income.
Dollar cost averaging lets you buy low, sell high.
It's an inexpensive way to create a professionally managed, diversified portfolio. Earning money in the markets is a tough, full-time job. Do you have the time to do that? The advantage your 401k plans offer is that someone does have the time.
Social Security won't be enough. It's widely accepted that Social Security is only meant to provide a modest percentage of your retirement income (possibly one-third of your income).