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 Investing in Retirement Funds There are two basic rules that almost every financial planner tells investors who have access to a 401(K). Start as early as possible and try to accumulate as much as you can. You should have as one of your specific goals the accumulation of as much money in a retirement fund as possible. These rules are basic, but they take into account the concept of compounding, which we discussed earlier. That is, the earlier you have more money, the more your money grows each year, as a result of the fact that each year's rate of return is calculated on the entire amount in the fund, and a separate calculation is performed each year on the entire amount in the fund each year. Also, if your employer is making matching contributions, it goes without saying that the total amount of your accumulation will be greater if you start earlier. You can calculate a number of examples to demonstrate the difference of saving as much as possible as early as possible in the Retirement Nest Egg Chart The amount that you will be able to invest in your 401(k) depends upon:
Since these rules change regularly, we are not able to provide a meaningful example that is not outdated, or will not be outdated at the end of this year. You should consult your employer's plan manager, and the plan documents for details setting forth the limits on the four Also, the matching funds from your employer can help in a way that few other retirement funds can match. That is, depending upon the provisions of the plan, your employer is able to contribute amounts up to a certain amount, that match your contributions. You receive the benefit of these in your nestegg! It is obvious that contributing as much as you can, as early as you can, and counting your employer's matching funds, is one of the fastest ways to accumulate a large retirement fund.
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