Decades ago, retirees could handle most of their bills in retirement with Social Security and pensions. This isn’t the case today.
Pensions are virtually non-existent in today’s workplace, and Social Security’s future looks uncertain. So, it’s up to you to craft your own future. Start by building a strong 401(k).
The key to a strong 401(k) is constant maximization until you reach the max contribution the IRS permits. Start by maximizing your employer’s match. For example, if your employer matches 100 percent of your contributions up to 4 percent of your salary, work toward having 4 percent of your salary sent to your 401(k). Once you hit that milestone, you can start working toward hitting that IRS contribution cap, which is $18,500 per year in 2018.
Maxing out means setting aside about $355 a week from your pay. For some, this may be impossible. If this is the case for you, only put away what your budget allows. Then, instead of buying that new car or the latest tech gadgets as you increase your earnings, push that extra cash into your 401(k) until you’ve hit that yearly maximum.
In five years, you’ll have a nice nest egg started.