Updated: Oct 9, 2020
Congratulations, you are now employed and have decided that you would like to start deferring some of your income for the future.
The big question is where and how should you save your hard-earned dollars. If your employer offers some type of an employer sponsored retirement plan such as a 401K this could be the first option to explore.
In most cases, employers will match a certain percentage of your income deferral. This is a very powerful motivator to use your current employer’s plan to save.
Matching is a great way to grow your savings. For example, say you have access to a plan that will match the first 6% of income deferral. What would this look like for an employee making $40,000 a year?
If said employee defers the full 6% of their income which is $2,400 over the course of a year the company will make a match of $2,400 for a total account value of $4,800.
So, you see in this situation the employee was able to receive a 100% return on their $2,400 income deferral through a company match. Pretty powerful!
Have you ever heard the saying, “leaving money on the table”, that is what happens when an employee does not take advantage of a company’s match.
So again, want to get a 100% return on a portion of your money? Check out your company’s retirement plan to see what is available and the benefits. Don’t leave “money on the table”.
Looking for retirement planning advice? Please give Sterling Financial Management a call 301-733-7777 to set up a conversation with one of our experienced Advisors.
Sterling Financial Management also has Advisors that specialize in reviewing existing or setting up a new employer sponsored plan.