Easiest Way To Increase Your 401k
Part of the recent tax compromise was a 2% decrease in your Social Security tax withholding.
The Obama administration is counting on you running to Wal-Mart and spending this money, as part of the Stealth-Stimulus Plan of 2010 (my moniker).
Please, Please, Please stop what you are doing right now, and call your benefits administrator, or your personnel office at work.
Tell them to put that 2% towards your 401k, or 403b. Don’t put it off, and don’t delay.
Found Money
This is found money, and you have no excuse for not putting this money away for retirement. You won’t miss it, and it will get you into the habit of saving something in that plan.
When they ask you what to put the money in, find a generic choice that is a mixture of US Stocks, Bonds, and International. Don’t put this off till you can ask your buddy what to invest in. Make a quick choice and get it done.
I am all for studying the details and making wise investment choices. But I want you to get this done, no muss, no fuss.
There’ll be time enuff for countin, when the dealin’s done-as Kenny Rogers famously sang!
No 403b?
If you don’t have a 403b or 401k option, then start an IRA right now. Again, it won’t take but a minute to do.
Then have the 2% direct deposited to that account. Many IRA’s can be started with low minimums if you choose a direct monthly deposit option.
Make a conscious choice to increase your amount each quarter/6month intervals or at a minimum annually till you hit your maximum.
Doing this in small steps again will allow you to adjust your spending, making this retirement savings much less painful.
Additional Retirement Savings:
If you and your spouse are making $40 grand apiece, and you both added this 2% to your savings this year and continued it for the next 20 years, @ 6% return, that is an extra $65,000 towards retirement. If you are 30 or even 40 years away from retirement that money is in 6 figures….
Not too shabby for “found” money!
Call them now!
Tags: adding to your 403b, increasing your 403b withholding, Retirement savings, saving for retirement
Great suggestion Dean. That is a great way to put an extra 2% away this year.
When someone is looking to increase their 401k contributions I recommend that they put their annual raise into it. If you get a 3% raise, increase your contribution by 3%.
Thanks Fred. I agree, any raise should be used to increase savings. It’s fine to have a little fun to reward yourself with a small part, but don’t let lifestyle inflation end up costing you much more than your raise!
Great suggestion! Unfortunately, I will not be receiving that 2% cut because I contribute to a teacher’s pension.
That’s exactly what I did with it.
Execution of a plan is a wonderful thing!
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