Don't Pass Up Free Money
Stock and bond funds in 401(k) accounts have taken a beating this quarter, leaving many investors worried about their long-term financial goals. A recent USA Today article, however, revealed something much more worrisome: almost half of all Americans 25 to 34 years-old are not saving for retirement at all - even those with employers who match contributions to their 401(k) or similar retirement plans.
If you fall into this category, here's something to consider: if you had $1,000 in a CD or bank account paying 7.2% (and good luck finding one that high), it would take 10 years to double your money. 10 years! However, if you deposit that same $1,000 in your employer's retirement plan, it could double overnight. For many plans, the employer will generally match about half of your total contributions for up to 6% of your salary. In other words, if you save 6%, your company will give you 3%. That's 9% of your salary saved in your first year alone. Talk to your company's human resources department to find out how to start a 401(k) plan.