talk to me about 401K's

Re: talk to me about 401K's

• MarylandWed

  July 2011

  what do you want to know? put aside as much as you can afford to up to the maximum allowed. whatever you put into your 401k will lower your taxable income so you will pay less in income tax. there are usually high penalties for withdrawing the money before retirement. you will be asked how you want your money allocated like stocks, bonds, etc. usually they can recommend an allocation for your age range which you can go with. you just want it to be diversified but not too safe as you are young and can handle the ups and downs of the market (i.e. higher risk). so you can have more stocks in your portfolio and less bonds because you have years and years to recover if disaster strikes whereas a person about to retire does not. however you want stocks (riskier than bonds) because there is historically a higher rate of return. anything else? the company who manages your 401k should be able to answer questions as well.

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• colenmike

  July 2011

  MD answered that beautifully.  They're saying you'll need to put away 20% of your income in order to actually be able to retire....yipee!

  Do as much as you can now when you're young because it will give the biggest impact.

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