saving within a 401k
TRANSCRIPT
SavingUnderstanding How much
savings is ideal within a 401k
Maximum Contribution Levels
50
Contribution:
Catch Up:
Total:
$17,500
$0
$17,500
50
Contribution:
Catch Up:
Total:
$17,500
$5,500
$23,000
Younger than older than
Get Free Money...
Yeah, some companiesmatch your contributions...Just because
How the match works
You Contribute:
Company Matches:
$5,000
5%
Free Money: $3,000
Your Salary: $60,000
There are multiple ways that this calculation can be done. This exampleassumes the company matches up to 5% of your salary or they matchyour total contribution... whichever is less
401k Savings Habits & Their Impact(30 Years From Today)
The Bad DayHe doesn't save in his
401k at all
The ClownHe saves, but he gets
no match
The Free SpiritShe maxes outher 401k
The DogShe increases
savings withher salaryand gets a
match
The Bad Day(30 Years From Today)
This one was easy! By notcommitting to the 401k, the Bad
Day today, turns into aTERRIBLE day 30 years from
now.
Total Savings:
$0
The Clown(30 Years From Today)
YearlyContribution:
Assumptions
Growth Rate:
$5,000
5%
The clown didn't fool around. Hestuck to a consistent
contribution. It ends upproviding him a nice surprise 30
years from now.
Total Savings:
$332,194
The Dog(30 Years From Today)
Yearly Salary:
Assumptions
Salary GrowthRate:
InvestmentGrowth Rate:
$50,000
ContributionPercentage:
10%
3.5%
5%
This dog hunkered down. Sheattached her growth in 401k
contributions to her salary. Thisstrategy allows for this dog toreally have its day in 30 years.
Total Savings:
$505,050
The Free Spirit(30 Years From Today)
YearlyContribution*:
Assumptions
Growth Rate:
$17,500
5%
The free spirit committed to themax from the beginning. Now
she may be truly free fromfinancial worries.
Total Savings:
$1,162,680
*We are assuming the contribution amount neverchanges (which it could) and that she doesn't utilize
the catch-up when she turns 50.
401k Saving Scorecard
$0 $332,194 $505,050 $1,162,680
Inaction is the only real loser here.Inaction today can lead to an inabilityto spend later. Whether you are theclown, dog or free spirit, commit to
one. You will be happier later.