1 Big Retirement Savings Move That Should Pay Off Big Down the Road
My daughter just graduated from college and is preparing to start her first "real job." The other day she asked me: "How much money should I put in my 401(k)?"
If your first thought is: "What is a 401(k)?," here's an easy answer: A 401(k) is the most common retirement plan offered by U.S. employers. It works like this:
Your employer pays you a salary. Let's say it's $68,500 -- the average starting salary for U.S. college graduates in 2024. Your employer also offers you the option to reserve part of this salary, say 10% (or $6,850), and deposit this money in a 401(k) retirement plan. Because you don't get the money (right away), you don't pay taxes on it (right away). You'll pay taxes when you withdraw the money from the account in retirement. That's the first big benefit of opening a 401(k) retirement account: You get to defer some taxes.
Source Fool.com
