401k plan should i contribute soon?

Question

ok, heres the thing, i want to start contributing to my 401 k plan. Im 26 years old. I cant contribute yet as i need the money right now and i am awaiting a raise in a few months. The sad part is, i live on long island, a very expensive area, apartments alone here are ridiculous in price so that why i need the money. My question is, how do all these women live when they get older if they didnt work or rely on their husbands/partners to contribute to retirement? And also, is it ok to wait a year or two before contributing since i need the money?

Answer 1

depends on the policy -- some companies vest on how long you have been in the plan vs how long the money has been int the plan -- ok if in the first case how long you have been in the plan you need to start right away even if it is only $5.00 a pay period -- but if it is how long the money is in the plan it will not matter!!! if i have lost you email me i will try to make it clearer!!!!!

Answer 2

I think that you should start contributing as soon as possible. When I was a little older than you are I started an IRA plan because an old guy who I worked with pushed me to do it. I really didn't want to think of the future and I wanted to have more money in my hands. Now I'm sorry that I didn't start sooner. This guy was about to retire. Over the years he had saved up over a million dollars in his retirement plan and he was able to retire very comfortably. Look I live in New York City and understand the high cost of living.

If you are to invest only 8% of your income, you will hardly even feel it. In ten years you can increase the percentage that you contribute. The money that you contribute to your 401K plan is not considered as income at this time so it's not taxed and you pay less taxes. So, your paycheck will not be as small as you may be anticipating. You should invest the money in International funds and in precious metals funds if you have that option since the dollar has dropped down in value so much due to the enornous national debt. An Asian Pacific fund could be good at this time since the Asian economies are rapidly growing. You can wait until you get your raise but don't delay too long. Good luck.

Answer 3

All people above are right - THE SOONER THE BETTER.



Several reasons:

1) You are losing money because your employer does not match your contributions. Whatever it is (3-6%), it's an additional amount your employer gives you. It just goes directly to your retirement account and not your wallet.

2) Compounding, compounding, compounding! It's when you earn return on capital (kind of interest for savings accounts) on your initial investment and (!) the money you earned in prior years. The sooner your start, the more benefit from compounding you will get.



Consider this. If you start contributing now, by investing 250 per month from your paycheck and assumed rate of return of 8% annually, you will have $86,509.56 in 15 years.



If you start contributing (same assumptions) five years from now, in 15 years (that is, same time period end), you will have only $45,736.51 in your retirement account.

Answer 4

I've been contributing since I was 16. If you have it deduct directly from your paycheck you start adapting to the amount you get weekly (with the contribution). I know it might be scary but if your employer matches 4% at least put that much in! I promise you'll be ok. Get it going!