Author: MJT
401k Retirement Plan – Plan Ahead, Time Flies and It Is Good
If It Finds You Prepared
In countries where dowry is customary at marriage of
daughters, people start saving in the name of their daughters from the day she
is born. In this manner, when she becomes 18-21 years and she is ready to
marry, the financial burden is not as much as it could have been otherwise.
Similarly, every one of us should prepare for our retirement when we are young
and full of life. On an average, a normal human being has some 30-40 years of
working years before retirement. Out of these, the first 10 years are taken in
finding the right direction, consolidating your career and your family life.
That leaves you with about 20-30 years to save in earnest to provide for your
retired age. A 401k retirement plan is an excellent option for anyone to start
with.
The Advantages of the 401k Retirement Plan
Anything that helps you save is simply great and needs your
attention. The 401k retirement plan is a system that a company offers its
employees as a benefit. The following are the main advantages:
1. Saving made simple – the saving that go into the 401k
retirement plan is directly deducted from your pay. Often the employer will
match what you are saving, depending upon what scheme you/ your company adopts.
The fact that payment is deducted directly from the salary is excellent,
because in this way you are not tempted to skip the savings.
2. The 401k retirement plan, being a retirement plan, will
not allow you to draw out on this fund until you reach a certain age, and
hence, provide you a cushioned nest when you would need financial support the
most, i.e. post retirement age.
3. The 401k retirement plan is protected by law even if you
quit the particular job under which you were given this benefit. You will have
the option to roll the money into an IRA, leave it in the 401k retirement plan
fund and avail of it as scheduled, after your retirement, or take it out as a
lump sum. Keep in mind however, that if you take it out you will be required to
pay taxes on it and hence, you will loose a good part of it.
4. The 401k retirement savings is totally tax-free and hence
this plan, when it matures will give a neat sum which will provide the
necessary security post-retirement. Your money will be saved quickly and
effortlessly and this will provide you a wonderful cushion in your retirement
age.
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