Are you wondering how to maximize your 401(k) contribution without feeling like you won't have any money leftover to spend? Hey, I get it! When I was just starting out as a young professional, I started off by contributing what I thought was a decent amount to my 401(k) retirement plan (10 percent or so) ... But as we started really defining how much money we'd eventually need to retire, especially as our goal timeline transitioned from our 60's down to our 40's, it quickly became apparent that our savings rate wasn't enough. If we were going to retire early successfully, then we were going to need to substantially bump up our 401(k) contributions. And by A LOT! So how do you do that? Let's be real ... you only make a fixed … [Read more...] about How To Maximize Your 401(k) Contribution
If there's one question about retirement planning that many people feel unsure about, it's this: How much should I contribute to my 401(k) each year? Seriously ... what's the magic answer? Is it 5%? 10%? 15%? Take a stroll around the Internet, and you're bound to find a number of opinions from reputable sites. For example, Investopedia is quoted as saying that "a good sweet spot is between 10% to 15%". That's not surprising; especially when you consider that when you're young (in your 20’s and 30’s) and just starting out, retirement can feel like such a long ways away. You know you should be saving up for the future. But at the same time you've got to balance your finances against goals that are in the present such as your family … [Read more...] about How Much Should I Contribute to My 401(k) Plan? This is the Number You Need to Hit!
Do you think you need 30 years of saving to make your retirement happen? Do you think you need to make a lot of money? Or know what the best stocks are to invest in each year? Of course not! I’m a huge fan of early retirement stories of the everyday-man; stories that prove that good-ole fashioned saving, simple investing, and living within your means CAN and WILL provide you with not just the means to enjoy a healthy retirement, but (when used correctly) the opportunity to retire 20 years ahead of the typical schedule! One incredible example of this has been captured in the outstanding ebook “How to Retire Early” by Robert and Robin Charlton. The book tells the tale of exactly how the two of them were able to retire after … [Read more...] about How This Couple Was Able to Retire Early After Just 15 Years of Saving
Can you “buy” passive income? Of course you can! Essentially this is the whole point of saving your money and stashing it away for financial freedom (or retirement). "A dollar saved is a dollar earned" ... or so the old saying goes. But is this really true? How much is a dollar saved really worth in 10, 20, or even 30 years? Or to be even more practical, how much financial freedom can this dollar actually produce for me every year in retirement? In this post, we’re going to go through an analysis of the savings process and see just exactly how much each dollar translates into the future. My goal: After reading this post, I want you to be able to associate some known value to each dollar saved. But first, let's see how … [Read more...] about How Much Passive Income Will a Dollar Saved Today Buy Me in the Future?
Whenever I first get talking to someone about personal finances, one of the first questions they have is: How much do I need to save for retirement? It's a heavy question, I know! Save too little and you might end up having to go back to work when you don't want to. But set your target too high, and you might end up working harder and saving longer than you really need to. Believe it or not, the math behind figuring out how much you need to save to retire is actually amazing simple! ... As in just one calculation ... That's right. You can go online and find some complex calculator with one hundred different inputs if you'd like. But more than likely whatever that fancy gadget tells you will be no more … [Read more...] about How Much Do I Need to Save for Retirement? The Incredibly Simple Answer
If you’ve got dreams of retiring early by age 55 or sooner, then you’ll be very delighted to know: This is a goal that is definitely well within your reach! Believe it or not, our ability to reach financial independence is something that is completely dependent upon our own decisions. It doesn't matter if you're in your 30's, 40's, or any age. If you want to make working optional and retire by age 55, then you just have to be willing to stick to a strategy that will get you there. Forget about the things you think are holding you back. In no place do we see this more than in one of the most popular money-excuses "I don't make enough money to ever retire". You might think that the dream of financial freedom is … [Read more...] about How to Retire By 55 (or Sooner) on a Salary of $50,000 or Less
If you’re already contributing the IRS maximum amount to your 401(k) and would like to keep reaping the tax benefits, then I have good news for you: After-tax 401(k) contributions may be your ticket to the next level! It’s not very well known, but what most of us think of as the IRS max is actually just one piece of the puzzle. The actual total amount of money that the IRS will allow both you and your employer to contribute to your 401(k) plan is actually quite a bit higher: $55,000 (for 2018). For high-percentage savers and early retirement seekers, this information can be extremely useful. But it’s also a strategy that comes with a few obstacles. First, let’s understand what after-tax 401(k) contributions are. Then … [Read more...] about How After-Tax 401(k) Contributions Can Take Your Retirement Savings Even Further
One of the most confusing aspects of participating in an employer sponsored retirement plan is with understanding what percentage of the money is actually yours to keep. Namely, this idea of "vesting". Yes ... believe it or not, not everything in your 401(k) is yours to keep! "How does 401(k) vesting work?" was one of the more complicated concepts for me to grasp. I can still recall opening my first 401(k) statement and seeing two amounts: One for the total and one for the vested amount. "Wait, what? … Why are there two amounts?" I thought. Does this mean that some of the money I just put into my 401(k) isn’t really mine? Fortunately, the answer to that question ended up being “no”. All the money I had contributed was of course … [Read more...] about How Does 401(k) Vesting Work? An Easy to Follow Explanation