Meet your Match: 401K

We all know the saying: "You're leaving money on the table..." But, what does this really mean? Would you logically, purposely, actually leave money on the table? Nope. So, why would you do that same (or the equivalent of it) on your 401K company match?

Let's be honest. In today's day in age, we are working longer (both number of hours, and are later to retire), continuously stressed, anxiety is at an all time high, and are running around like a chicken with their head cut off. The question becomes, what about retirement?

As a late 20 something, retirement seems like a long shot, and something far in the distance that I can barely see with binoculars. A question I often receive is: "Why should I start saving now? I have no money. Plus, I can't live without my #la_columbe coffee or fancy poke bowl for lunch..." The excuses continue. I am a Millenial, and am no stranger to vacations, FOMO, or the fancy dinner out. But, as someone who also takes saving "v" seriously, I can appreciate sacrifice. Yes, I like nice things as much as the next girl, but I know my budget, my investments, and my limits. We will cover investments in a separate blog post (or many), but the simple question is: "why aren't you saving? You're not stupid ... but ..."

Let's talk about your 401K match. The first question you need to ask yourself:

• "How much is my company match?" Followed quickly by:

• "Does my company offer a pension?"

You should know, and always know, the answers to above questions. If you're taking a new job, or considering jumping ship to a new company, you should know the answers before signing your #John_Hancock.

Fundamentally, a 401K match is about compounding interest. A $1 today is more valuable than a $1 in the future. Why is that? Because of inflation and because of stock market trends. So, as an example, if you invest that $1 into the S&P 500 today, you'll gain the return (or increase) of the market. Now, many of peers get a little nervous when I talk about the market, because they often think about losing money. That's fair, but I would encourage you to the think about the long game. If you're in your 20's - you will not retire for 35+ years - and that is if you're lucky :) The market will go up and down, and that is okay! You're playing the long game - don't hate the player - love the game!

Back to 401K match. If your company offers a 3% match, you need to sign up to give at least 3% per pay check. That is a MINIMUM. The best savers I know save 25% of their paycheck (gross income before taxes), but I'm comfortably with 10 - 15% as long as you "max out" your 401K for the year. Based on your age, and martial status, that number changes, but normally is around $18K per year. A bonus tip: if you're eligible for a bonus, or some sort commission, increase your 401K match during that time frame. You should always be living off your base salary, so this bonus should be 'gravy' and you really won't miss the extra money - you have plenty of shoes, my friend.

It is really as simple as that folks. When in doubt: Save, and save again.

Until next time,

Alyssa

New York City's Brooklyn Bridge which overlooks Wall Street and the Financial District

Note: The ideas above are strictly my own, and should not be taken as any sort of financial or investment advice. I am not a licensed financial planner, and these ideas do not guarantee any sort of return (or loss) in today's marketplace. Thank you!