What 401K Contribution Level Should You Choose?
When starting a new job, filling out all the forms can be very confusing. Many do not know how much to contribute to their 401Ks. 401K contributions are generally taken out of your paycheck pre-tax and represent a certain percentage of your gross pay.
To determine your contribution, simply review your employer’s benefits plan for the “Employer Match %” in the 401K section. If you have trouble finding it, ask your HR rep. The plan will say something like “Employer matches up to x%,” which means you must set your contribution to at least x% to maximize this benefit.
Some plans have vesting periods where you must work for the company for a certain amount of time (usually a year) before you can access the funds your employer contributes as a 401K match.
If you have money left over, consider opening an individual brokerage account to invest in stocks and ETFs. If you’re looking to build long term wealth, real estate may be something to consider — use a free investment property analysis tool to screen potential investments.