401K Contribution?

Question

How much do you have taken out of your check for 401K?
Does the company you work for currently match that contribution? The company I work for will match up to 3% and then and then up to 5% they will contribute 1/2. I just have the 3% held out of my check every week. I'm 26. Should I have more taken out? What should I do?

I'm young and I don't know a lot about this. I figured since I won't be able to retire for about 50 more years that I will be good with the 3% for a while.....Please give me any info you can in lamens terms.

100% match up to 3%
50% on up to 5% is that clearer.....sorry if this is confusing.

Answer 1

On the 3% you contribute you are getting 100% return on your contribution, plus any intrest or dividends. If you were to contribute 2 more percent you will instantly recieve 50% return on your investment,plus intrest and dividends. It is crazy not to take all of the "free" money you can get your hands on. Think about it, if I told you to give me 100 dollars and I would immeaditly return 150 dollars to you, would you pass that up? Save all you can while you can. If you change jobs, you can roll that money over into an IRA. I am 50 years old and the only money I really saved was what was taken out in my 401k. I am happy that I did so when I was young or I would really be dreading the next 10-15 years.

Answer 2

I would put as much as you can afford into the 401k - up until they stop matching you the 50%. The sooner you have money in an investment working for you, the more money you are going to see when you retire. You DO NOT want to hold off on saving for your retirement. Especially if you are young and not saddled by the burden of housing costs, mortgages and all the fun stuff that comes with getting old.
Besides, the money your work is giving you is pretty much free money! You do want free money right? ;-)

Answer 3

Good job so far! You're in the plan and that's normally something most young people don't really consider right away! It sounds like your plan matches 3% and then half up to 5%.....assuming that's correct, take a deep breath and max out your 401K because the COMPANY IS GIVING YOU FREE $$, and anytime the COMPANY wants to give away FREE $$, we should all line up and take advantage of it!

Answer 4

In my opinion,you should do at least 5% to "max out the match". By doing only 3%, you are quite litterally leaving money on the table.

I wish that I had done more in the past. My company matches exactly the same as yours and I am doing 12%.

Answer 5

what you should do is contribute toward your 401k up to the percentage that your company will match (3%). You should then open a Roth IRA and contribute about 7% of your pay toward that.

Answer 6

Echoing what the above posters have said, the maximum that your company will match is the minimum that you should contribute.

Contribute at least 5% or you're giving up the biggest return on your investment.

Answer 7

It is always a good idea to start saving for retirement as early as possible. If you are confused about your account ask the human resources person at your company. If there is no one you can talk to, go to your bank and ask to talk to someone there. I have found that they are always glad to help.

Answer 8

The general rule of thumb is:

Invest in your 401(k) up to the match then...

Invest in your IRA until the max then...

Invest in your 401(k) until the max then....

Invest in your taxable account.

As another poster stated...invest early and often and you will be fine.