Mismanaging your 401(k) can be a very costly mistake, and plenty of people are confused or simply not confident that they're making the right decisions with their retirement account. Luckily, there are some basic steps to follow to ensure that you can get the right balance of safety and growth with your savings. People who contribute the right amount, save regularly, and allocate their investments properly will be able to retire without financial stresses.
Many people simply contribute a default amount. Some set up a contribution when they first start off with an employer, then never think about it again. Automatic savings are great, but the best financial plans involve deliberate decision-making that reflects all aspects of a household's financial goals and needs. That sounds like a complicated approach, but it's very important.
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The amount you should contribute really depends on a number of factors. A general rule of thumb is to take full advantage of your employer's match, assuming that it's offered. Many companies offer dollar-for-dollar contributions to your retirement account, up to a certain limit. For example, if you invest 3% of each paycheck in your 401(k), your employer will also pay that much into the account. Specifics of the matching program are usually detailed in an employee benefits handbook or the 401(k) account documentation. If you have someone in charge of benefits or human resources at work, that person should also be a helpful resource.