If your company offers a 401k, Troy Sharp of Oak Harvest Financial says to contribute as much as you can to see it grow into solid 6 figures in only 20 years. "The first step is to identify how much you want to save. You absolutely want to pay yourself first. The 401(k) makes that easy through payroll deductions." Sharpe says the traditional 401k and the Roth 401k have two different ways to save on your taxes. "You can take the tax deduction today and put it in the pre-tax part. or --- Contribute to the tax-free portion, which means you'll pay income taxes on it today, but you'll have better advantages when it comes to distributing the cash for a better retirement."
401k Contributions are Up in Texas
The traditional 401(k) and the Roth 401(k) make saving for retirement convenient by saving money out of every paycheck. Sharpe says to contribute as much as you can and see if your employer makes a match. He says to visit with a CPA to discuss just how to make your contributions. Either way, Sharpe says as long as you leave it alone and let it grow, even the most modest of contributions will pile up to a tidy sum by the time you're 64.
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Benjamin Franklin and Compound Interest: “Money makes money. And the money that money makes, makes money”Photo: Photo by Richard Levine/Corbis via Getty Images