IFA
Index Porfolio 90
IFA
Index Porfolio 70
IFA
Index Porfolio 50
IFA
Index Porfolio 30
IFA
Index Porfolio 10
The Advantages of a 401(k)
People who aren't enrolled in a 401(k) plan may think that saving is difficult
and costs a lot of money. But, saving with a 401(k) plan is a simple way to
prepare you and your family for the future without having to spend a lot of
money. With a 401(k) plan, you'll have extra money in your pocket now, and
a lot more for your retirement.
Pay yourself first!
When you receive a paycheck, who do you pay first? Because of taxes,
you're paying the government before you pay yourself. With bills and other
financial responsibilities, you probably have to pay others before you can
spend your money on yourself and your family.
With a 401(k) plan, you can actually pay yourself before you pay anyone else!
You decide how much you want to defer into your 401(k) plan and the money is
automatically taken from your paycheck. So, instead of paying your taxes or
the bills first, you're paying yourself first.
Lower your taxes
By deciding to pay yourself first through a 401(k) plan, the money
you want to put into your account is taken automatically from your paycheck before
taxes. Since this money isn't taxable until retirement, saving with a
401(k) plan can actually lower your tax bill.
This chart illustrates that by saving with a 401(k), you'll be paying yourself first while paying less taxes:
With a 401(k) |
Without a 401(k) |
|
Your annual pay |
$23,000 |
$23,000 |
Your pre-tax contribution |
$1,150 |
$0 |
Your federal tax bill |
$3,277 |
$3,450 |
If you save with a 401(k), you'll have less taxes to pay now and big savings in the future!
Preparing for the future without affecting today.
Saving for your retirement has so many advantages and it will not
affect the way you live today or provide for your family. In fact, it will
lower your tax bill and allow you to prepare you and your family for a time
when you are ready to stop working.
Saving with a 401(k) plan is too easy to pass up! Consider how easy it is to save with your employer plan. Also, consider how it will lower your tax bill and allow you to pay yourself first. Now, can you really afford not to save with a 401(k) plan?
The Profit Sharing/401(k) Council of America (PSCA) is a nonprofit association advocating increased retirement security through profit sharing, 401(k) and related defined contribution programs.
