Your first 401(k) can seem intimidating. Sure, you know that it’s a tool to help save for retirement. And sure, you know it helps to stash as much money in it as possible. But what else do you need to know about a 40(k), and what do you do with it? Here are some steps to take.
Find Out About a Match
The first thing you should do is find out if your employer offers a 401(k) match. You’ll have to ask your HR department about this. If the company does offer a 401(k) match, get to know the details of the plan, because it’s an easy way to rack up savings. Some companies offer a 100 percent match up to a certain percentage of your salary; some offer a 50 percent match. Whatever the number is, make sure you’re depositing enough money to get that match. That’s free money toward retirement.
Set Things Up
If your company automatically enrolls you in the 401(k) plan, that’s great. Your contributions will be deducted from your paychecks. However, if you need to opt-in to auto contributions, do so immediately. As USA Today notes, you want to deposit about 15 percent of your income into the 401(k) (that can include matching dollars). If you can’t get there quite yet, try to increase the percentage of your contributions every few months until you hit that 15 percent mark.
Keep Things Going
Now that you have your 401(k) set up, do your best to keep your contributions going. The more money you contribute to the plan, the more you’ll benefit. Contributing to the 401(k) might make things tight sometimes, but keep your eye on the ultimate prize — retiring with a nice savings cushion.