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David Bach The Automatic Millionaire

David Bach, The Automatic Millionaire

A Challenge for Your Retirement Plan

by David Bach

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Posted on Monday, September 24, 2007, 12:00AM

Summer is over, the kids are in school, and the rest of us are back at the office.

With only a few pages left on the calendar, September is the perfect time to make sure you're on track to fully fund your retirement plan at work. Maxing it out should be your goal.

A Challenge to the Underfunded

The truth is, people simply aren't saving enough right now to support themselves in retirement. In fact, last month the Center for Retirement Research showed that almost 45 percent of American households will fall short of meeting their expected retirement income needs.

What's worse is that the 2007 Retirement Confidence Survey from the Employment Benefit Research Institute (EBRI) reports more than half of Americans have less than $25,000 in their retirement accounts.

With these shocking statistics in mind, I challenge you to change your future in a big way beginning this month. Saving a bundle for retirement really doesn't have to be that difficult. All you have to do is make the decision to do something most people don't do -- pay yourself first.

Fortunately, hundreds of thousands of companies in the United States offer employees the perfect way to pay themselves first automatically through an employer-sponsored 401(k) plan. (If you happen to be self-employed, read my column "Six Retirement Plans for Small Business Owners.")

Slow and Steady Wins the Race

Other recent news about 401(k) plans is more encouraging. Just last week, EBRI and the Investment Company Institute (ICI) released the results of their latest study on 401(k) participation.

Employees who contributed to their 401(k) plans on a regular, long-term basis with the same employer between 1999 and 2006 saw their account balances grow from $67,760 to $121,202 on average. That's an annual compounded growth rate of almost 9 percent.

In a recent MarketWatch article, Jack VanDerhei, a Temple University professor and EBRI fellow, said, "If you focus on consistent participants, you can see how people who stay in the system tend to build significant account balances. With the discipline of saving little by little through 401(k) plans, workers can successfully build a nest egg for retirement."

How Are You Doing?

If you're under age 50, the IRS limit for pretax 401(k) contributions is $15,500 for this year. If you're over 50, there's a $5,000 catch-up provision that increases that limit to $20,500.

Of course, you'll need to know what your employer's maximum allowable contribution for the plan is as well. It could be lower -- some plans won't allow you to save more than 15 percent of your gross income, and certain "highly compensated" employees may be limited even more. So be sure to check with your HR department.

In any case, your goal should be to max out your plan. If you're currently on track to do so, congratulations -- you're accomplishing something the vast majority of Americans can't or won't do. If you're not on track, follow these simple steps to finish strong in 2007 and be on your way to finishing rich when you retire:

1. Save at least one hour's worth of your daily income.

Even if you've been contributing consistently to your savings plan, you may not be on target to max it out. Most people who sign up for 401(k) plans contribute around 4 percent of their income. Most people also retire poor, dependent on Social Security or family to survive. So you should actually be contributing a lot more.

In fact, at the very least you should be contributing one hour's worth of income each day; on a percentage basis, that's about 12-1/2 percent of your gross income. If you feel you're getting a late start with your saving, aim to contribute two hour's worth of income per day, or 25 percent of your gross pay.

I realize this is ambitious, but it's your future we're discussing. Keep in mind that most of us tend to underestimate how much we think we can manage in payroll deductions. As a result, we wind up low-balling ourselves -- and our future.

2. Determine how much money you'll need.

The traditional rule of thumb for retirement savings is that you'll need to replace at least 70 percent of your current income in order to live comfortably after you retire. In my experience as a financial advisor for almost a decade, however, I've found that most people need 100 percent of their pre-retirement income or even more due to their desire to enjoy their golden years.

So my recommendation is to create a plan that replaces 100 percent of your current income, unless you truly plan to live on less. And the only way you'll be able to do that is to save more now.

Yahoo! Finance offers a great calculator to run your financial numbers. Check it out to get a rough idea -- and possibly a wakeup call -- of what you'll need for your retirement. But I highly recommend meeting with a financial advisor to work out a solid plan of action.

3. Increase your contributions today.

Most employees are paid twice a month. So if you have six pay periods left in 2007, calculate how much you'll need to increase your contributions from now until the end of the year to meet your plan's maximum. Doing so now could amount to literally hundreds of thousands of dollars over the long term.

If you're skeptical about being able to afford the temporary increase, determine how you can turbo charge your Latte Factor in order to make this happen. Dig deep to come up with an amount that will bring you as close as possible to maxing out your plan.

You can find the money, and you'll be excited at how fast it will pile up -- especially if you're one of the millions of Americans whose employers contribute matching funds to their retirement accounts.

Once you've made the necessary calculations, contact your HR department to make the change to your plan. Don't put this off -- delaying your savings increase even another week may require you to bump up your contributions even more in the future to reach your goal. Do it today.

Tell Me How You Do

If you take me up on my challenge, post a comment below to share your success with the Yahoo! Finance community.

And let me know what else you'd like to see on the topic of 401(k) plans. Between investment allocation, loans, rollovers, and withdrawals, there's enough information for an entire series of articles. What specifically would you like to know? Post your questions and I'll work to answer them in upcoming columns.

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131 Comments

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  • Embry - Thursday, October 11, 2007, 4:41AM ET  Report Abuse

    • Overall: 5/5

    very good item. my wife is in the process of leaving a job,and this info really helped. thank you

  • Janet - Tuesday, October 9, 2007, 5:51PM ET  Report Abuse

    • Overall: 4/5

    I have 25% of my salary going to my 401K. I achieved this nearly painlessly by starting out by putting in the max amount that my employer would match . For me, they match 50 cents on the dollar up to 6%, so I started with 6%. I am able to revisit my 401K deductions once a quarter, so each quarter I raised my deduction by 1%, except for the quarter when raises came around, I raised it by 2%. For my husband, he has a sweet 401K deal. His employer matches dollar per dollar up to 10% of his salary. We started him out at 10% and left it there for quite a few years, as by doing this he was literally saving 20% of his salary into his retirement. In the past couple of years I have beefed that up. He is now set up for Vanguard to automatically raise the amount deducted for his 401K account by 1% the month that he gets his raise each year. While this will not increase his employers contribution, it does put a little more towards retirement.

  • Ice - Monday, October 1, 2007, 4:26PM ET  Report Abuse

    • Overall: 3/5

    Since we can't predict the future, the best thing to do is save in tax deferred, tax-free, and taxable accounts during your working life. That will give you the flexibility to draw from the most advantageous account at the point in time you need to. As for the 401k critics, yes it's true that you could be in a higher tax bracket when you retire....... but you gain so much more with tax deferred growth vs. the "pay as you go" strategy. And............ having to worry about being in a higher tax bracket than you anticipated is not the worst problem you can have in retirement! Good luck to everyone.

  • Steve - Monday, October 1, 2007, 12:26PM ET  Report Abuse

    • Overall: 1/5

    The average working man already gives two to three hours for taxes a day. If we give one more for savings how can a family live off of four hours pay a day? It can't be done. There has to be another answer, like abandoning S.S. and letting each of us take the S.S. money and invest it ourselves.

  • allenEv - Monday, October 1, 2007, 12:15PM ET  Report Abuse

    • Overall: 1/5

    Big problem with PYF thing - you really only come out ahead w. deferred RAs if your retirement tax rate is LESS than when you earn the money - a dubious prediction about the distant future. Best is ROTH. You pay Uncle Sam first but only once - he doesn't get to claim the income from your income perpetually. Second best is a self administered after tax brokerage - invest in Small Dogs - you can limit taxes to just 15%. Third best is 401K but only up to the maximum match from your employer.

  • jim - Monday, October 1, 2007, 11:12AM ET  Report Abuse

    • Overall: 3/5

    A good article for basics. I like the one hours pay per day as a rule of thumb for saving. I am already on my way towards retirement (Hopefully 10 years from now.) and saving for that day. Redwoodtrucking makes a good point in his comment. What happens to the market when the babyboomers start to cash out. I am in the middle of the boomer generation and think about this often an watch the markets for a trend. I would like to see an article addressing this scenario.

  • Kennie - Monday, October 1, 2007, 5:40AM ET  Report Abuse

    • Overall: 2/5

    These are very basic info that we read everywhere... anything more advance? I like your column, and i have have learn from your column. But as i get better with money, how can this article help us further? I save 15% everymonth into a separate banking account and that account will be use for investment.. i have use the money to buy income producing rental property, buy blur chip stocks etc.. But i need the next step. Where to invest into business that can generate faster income? Velocity of money is also an important factor to help us grow. I appreciate your advise and maybe this is not the right place to discuss more advance type of finance. Please discuss with me through my blog shootingforstar,blogspot.com where we can discuss further and let us learn more from you. Thanks again.

  • Yahoo! Finance - Monday, October 1, 2007, 2:34AM ET  Report Abuse

    • Overall: 3/5

    Okay, the article is fine and dandy. The comments are interesting. I would suggest one thing and that is everyone should get their health in order because they are not going to be enjoying retirement. Diabetes, obesity, poor eating habits, etc will kill 'em before the money runs out.

  • B W - Monday, October 1, 2007, 12:15AM ET  Report Abuse

    • Overall: 3/5

    The article was ok. I got much more out of the comments posted than the article. I am 44 now, and retired from the Navy after 24 years. Got divorced after 3 full years of trying and got hit with 40.59% loss of retirement and much more. enough said there. I got a good job I love that pays $52k a year plus benefits and reimbursements. My mil retirement goes up every year by probably less than inflation. My job goes up every year also by up to 4%. So with approximately $79.5K a year this year, and just started 401K after the divorce. I have 6.6K in the 401K already but had to reduce the percentage from 30% of my pay to 10% for a year or so. I maxed the Roth and have 119K left in it. I have about 180K in inheritance coming in for many years that I can use for retirement accounts and non retirement accounts. 3.6K in a new non retirement mutual. 200K house that I owe 160K on at 5.875% for fixed 30 years. I pay my credit card in full every month. Paid off my car 54 months early. Will pay off my house probably in about 12 years. I find myself mostly on track for what I think I will need in 11 to 15 years when I decide I have had enough of working for the best boss I have ever had and a great company. I wish to have enough invested to meet my needs in my life, and to have much to pass on to my son after I use what I need. I am single now and planning a prenup if and when. My goals include what I said before, and learning what I need to know as conditions change. The baby boomer's projected effects on the future market hit me hard, from one commentor. With a long horizon to invest, I go hard. Once it shortens up to 5 years or less, I will move part of my investments to safer ground. I diversify and feel good about my choices. I make sure they are the right choices every two years, and may move from one fund to a stronger fund about that often. Interest payments are money down the toilet. I paid $960 in interest for the car, and will pay a lot more for the mortgage loan before I pay it in full. I put the money I do not have to waste in interest payments into the house and my future. Platinum reward MC, 8.25apr, 10K in the bank as my emergency fund so I do not rape my investments. Credit rating 783 right now and going up. Bills on auto payment on my credit card. 19 inch flat panel monitor, DVD Portable, Lazer Radar detector, small fridge in my rooms, small fridge for the car, all in rewards. If you owe Crdit cards and have a high APR, put your retirement investing on a back shelf and pay them off highest APR to lowest. Pay loans off with Principle reductions. Establish your emergency fund. Have savings and checking to pay your normal bills with. Once that is accomplished, then start thinking of investing. I live a bit frugal, but why not spend a bit from time to time for quality of life? I am not waiting until I am old and retired to spend for enjoyment. I can and will reach my investment goals. I hope you can also. Thank you for reading my comments.

  • Roz - Monday, October 1, 2007, 12:09AM ET  Report Abuse

    • Overall: 1/5

    Its not that I think this is a bad article but saving all your money for retirement is just a holding tank for all the illnesses you are going to have to pay for in those wonderful "golden years". Retirement is overrated. All the people I know who have retired are sick in hospitals and/or nursing homes. Don't wait until you retire to live your life and spend your money!

  • Jerrold J - Sunday, September 30, 2007, 10:51PM ET  Report Abuse

    • Overall: 1/5

    Saving part of your income is a good start BUT the thing that I would LOVE to see is for somebody to WAKE UP and realize a few simple things. 1. Where does 90% of the US population have the majority of their "retirement funds"? Now link this with a population age demographic curve. Notice anything????? Every "investment guru" I have heard is PREACHING, "Save, invest in your 401K". Ask yourself this simple question." IF 90 % of the population HOLDS their retirement income in the stock market and in 2016 we have a HUGE number of baby boomers hitting age 70 when by FEDERAL LAW they MUST start taking mandatory withdrawals; then just what do you expect the stock market to do?" More buyers then sellers ALWAYS means the value of the ANY market falls, and if the stock market starts tanking; what will the majority of the baby boomers do? Think they will sit on the funds and watch the value go down? Or will they massively flood the market with sell orders to preserve their funds? Buy and hold was good advice for the WW11 generation but will NOT work for babyboomers. I HIGHLY suggest that the "experts" start talking to people about HOW to ACTIVELY manage THEIR retirement funds and not just depend on SALES people who get paid for you to invest in the stock market. Think about why there are now more mutual funds then there are stocks. Think about the population age curve and how that will affect future market cycles. Just like real estate "flippers" who followed the herd into real estate and are now getting killed with adjustable rate morgages, and just like the dotcom bubble when the herd followed the "easy money"; we are going to see a huge number of people who THOUGHT they could retire to the beach be forced back into the workforce. Now we are starting to hear about college students who took out "private loans" and can not afford the payments. This IS the land of oppurtunity but just when did it become the land of no personal responsibilty? If you are going to sign loan papers it is YOUR responsibility to KNOW what you are agreeing to and if you do not understand the loan, the risks of the market, be it real estate market, stock market, or interest market then look in the mirror and decide if you are going to cry for federal help or are you going to personally manage your money?

  • WAKE UP - Sunday, September 30, 2007, 10:35PM ET  Report Abuse

    • Overall: 5/5

    David, I've been practicing your advice for a very long time. It's too bad that my husband thinks he's a millionaire and uses our credit line as if it were a checking account. At the present time it is maxed out at $100,000 and he plans on retiring next March. Who wants to retire with this POOR fool?

  • Allison - Sunday, September 30, 2007, 10:33PM ET  Report Abuse

    • Overall: 3/5

    At 28 it's scary to think I have more in my retirement account than half of Americans today. I started a Roth at 18 and began by putting my tax return money in every year. Saving CAN be done on 6.95 a year, as each articel I've read says, "pay yourself first." I've only had cable TV for a year, I pack a lunch every day, and I don't need a big screen, or a clothing budget every month. It's all about priorities. For me, I plan to enjoy retirement!

  • dg - Sunday, September 30, 2007, 10:28PM ET  Report Abuse

    • Overall: 5/5

    You better read this and max yourself out (get a Roth too) - you see what's happening now with the retirees health care (which we were under the impression would be covered for the rest of our life) and it's not going to be cheap. I understand some of the Medicare plans are going upwards of 20% in 2008 and I have no clue today what they cost. It's a frightening time for old people. I never thought I'd see days like this and according to an article I just read, deds. and copays could run into the hundreds of thousands of dollars (that most of us don't have don't have).

  • Swmmr58 - Sunday, September 30, 2007, 10:26PM ET  Report Abuse

    • Overall: 4/5

    Well Done. I would have liked to see some emphasis on Roth IRAs which are a real boost to anyone who max's-out their 401K plan. Also, next time you might mention the benefit of starting a Roth IRA for each working child in your family. It starts them out on an important track and who knows? Maybe they'll be better able to take care of me when I'm older.

  • Laura - Sunday, September 30, 2007, 10:20PM ET  Report Abuse

    • Overall: 2/5

    RRight... if you are making more than $6.95 an hour before taxes and bills and unions dues etc..come on get down here where I and millions like me live and do it...forget it .

  • Yahoo! Finance User - Sunday, September 30, 2007, 10:06PM ET  Report Abuse

    • Overall: 1/5

    There is nothing new in this article. If you look at the archives its just the same stuff, different day. Hopefully, those of you who haven't started saving for retirement will start soon so we can get new articles. Save now! Its good for you and your family.

  • Yahoo! Finance User - Sunday, September 30, 2007, 4:59AM ET  Report Abuse

    • Overall: 3/5

    Good article in general. I'm not sure if 70 to 100% of your income is correct for most. Many people spend a lot less after retirement (no mortgage, don't need to save as much, etc.)

  • CG - Saturday, September 29, 2007, 8:53PM ET  Report Abuse

    • Overall: 3/5

    I've answered the call. This year I can not contribute the max to my Roth (I did rollover 7112 which has grown to 7229 [had to convert my Rollover and have $2k to pay the tax when I get the form at the end of the year). However, I am contributing 10% of my salary to my 457B and so far I have 1143 in that. I'm trying to see at minimum $1 mil by the time I'm 60 and I'm 30 now. I am considering bumping up my contributions to 15% in the beginning of the year as well as maxing out $5k in my Roth for my 2008 contributions. Listen to me folks, Social Security will not cut it anymore. You need to save and be consistent with it. I have a government job, and there is NO MATCH from the state, but I do get a guaranteed pension of 62% of my highest salary when I retire. I don't know how cost of living will be for me when I get older, but I know it will be very high and I may not get to live in the state I was born and raised in all my life. But I want to be comfortable when I'm old...so that's why I supplement my pension with a 457 and Roth IRA (I love that the Roth will be tax free...). Plus after 2008, you can directly roll over your 401k, or pre tax savings directly to a Roth (no doubt after paying the taxes on them first). SAVE, America...SAVE!

  • Jonathan - Saturday, September 29, 2007, 12:22PM ET  Report Abuse

    • Overall: 5/5

    Great article! One of the ways that a person can allow themselves to retire with 70 to 75 percent of their pre-retirement income without living in extreme frugality is to have any major finance purchases paid off at the time of retirement. This includes any items they think they may want or need while in retirement, including but not limited to rv's, boats, buildings, extra homes/condo's, etc. Set a date to pay off all existing debt 6 to twelve months before your retirement date so that you have time to calculate whether or not the funds are available to continue living the lifestyle you currently enjoy post retirement. If you are unable to do this then you may need 90 to 100 percent of your pre-retirement income. Also the advice on making sure to contribute the maximum amount of company match along with 401K allowance is the best advice that any retirement counselor could give an individual today. Continue your excellent work, although I would like to see more pieces on the savings plans out there for self employed entrepreneurs. These individuals very often make substantial amounts of money, but are often found lacking in opportunities to invest for their retirement.

  • Lewis - Friday, September 28, 2007, 7:42PM ET  Report Abuse

    • Overall: 4/5

    I'm 27 years old and I've been investing 25% of my income in my 401k, it makes for one hell of a tax break in April, and I've averaged over 20% return for the past 3 years (including this one). My problem is that as my income increases, the percentage that I contribute will eventually put me over the 15500 limit possibly as early as next year. I guess I would like to see an article on whether or not I can continue to contribute the excess after tax, or if the 15500 limit holds for post and pre tax together. Thanks for the article. I like reading articles that reinforce what I already believe, it's encouraging.

  • Professional Engineer - Friday, September 28, 2007, 2:07PM ET  Report Abuse

    • Overall: 4/5

    IMPORTANT! - If you intend to contribute all the way, to reach your maximum 401K contribution this year of $15,500 (or $20,500 if you're over 50), spread it out over the entire year to fully realize your employer's matching contributions. If you hit your maximum contribution early, you forfeit (miss) whatever contribution your employee makes into your plan. This can be a costly oversight! It's basic math to determine what percentage of your earnings will be required to achieve an even spread. Income variables, e.g., overtime, bonuses, commissions, and pay adjustments, need require you to recalculate and adjust your percentage contribution periodically during the year (now's a good time to review).

  • dining7days - Friday, September 28, 2007, 12:42PM ET  Report Abuse

    • Overall: 3/5

    Just an FYI to the reviewer who commented on Bernanke's investment in Altria: He reported owning only one stock, Altria valued at approximately $10,000. He also reported his IRA value which doesn't disclose his investments. His IRA is valued at over $1M. Therefore, we can say that his Altria position is around 1% of his stock holdings. No one knows how much of the IRA is in Altria, but, it's probably not more than a couple percent. So, always dig deeper when you read statisitics in an article, chances are the author knows less than you.

  • Chet - Friday, September 28, 2007, 9:14AM ET  Report Abuse

    • Overall: 4/5

    Good advice. My wife and I (I'm 50, she's 44) started 401(k) contributions while in our twenties, taking full advantage of company matches. Thanks to the magic of compounding, our total retirement savings now total over $725K. Regular evaluation of asset allocation, staying with low-expense mutual funds like Vanguard and automatic payroll deduction have helped us along the way. We can now afford to continue to save for our kids' education (Take care of your retirement needs first - no bank is going to lend you money when you don't have earned income).

  • Yahoo! Finance User - Thursday, September 27, 2007, 7:59PM ET  Report Abuse

    • Overall: 4/5

    Wife and I have been consistently contributing 20% the last 4 years. We now have a combined 1/4 million in the bank, and it feels like a big accomplishment. We attribute our success due to keeping credit card balances at 0, and not keeping installment debts for too long. That ensures that we're not pinched when we max out our retirement contributions. Good luck out there! And yes, great article.

  • Happy_to_be_in_good_ol_USA - Thursday, September 27, 2007, 6:45PM ET  Report Abuse

    • Overall: 4/5

    To all those trashing Mr. Bach I can only say that your are besides the point. Even if the guy is not right 100%, he sure has good points in what he writes, online or on his books. Following only some of his advice will put all of us ahead in the retirement savings game than were we are now. For those who are maxing out the IRAs or 401ks or don't have any, you can always try a regular investment account where you buy mutual funds or even just dividend stocks for the very long term, with the dividends re-invested automatically. We discovered www.sharebuilder.com a few years ago where you can buy stocks even if you have only $50.00/months available. For those who are young, and don't make much money, without 401ks at work, or not enough money to buy into a mutual fund or IRA, sharebuilder.com is a good investing tool to start with. Start with 25$/month or a paycheck and work your way up by slowly increasing the amounts invested every month. Buy only good dividend stocks, reputable companies that have proved over and over the past 20-30 years that they are worth investing. This is all automated, and you don't need to do anything but increase the amount of money invested. There was an article a while back on how Ben Bernanke, the current Federal Reserva chairman has invested in one single company his entire career: Altria (MO). Here is the link to the article: http://finance.yahoo.com/expert/article/futureinvest/1566 You'd think that he knows what he's doing. Coming back to Mr. Bach's overall advice, I find it well intentioned, even though there are pieces of it that don't really apply to the vast majority of us, like the 100% rule oof income post retirement. But what's wrong with the many other pieces where he's giving us ideas how to better prepare ourselves for retirement? As far as I'm concerned, I know that I've learned a lot of valuable things from the books and article that he's written. Thank you, Mr. Bach.

  • Valerie - Thursday, September 27, 2007, 4:49PM ET  Report Abuse

    • Overall: 4/5

    I saw a number of comments by people concerned over the tax rate (33%) or 401ks vs investing outside the 401k and paying a lessor rate than the gains. This analysis is false! If you assume a 33% tax rate vs 20% (cap gains/dividends) on after tax invested money, do a spreadsheet and see that the 401k wins. This is because, the 401k investment goes in pre-tax and anything you invest goes in after tax. I don't agree you the same or more income when you retire. I retired at 54, the kids are gone, the house will be paid off shortly. I will actually earn more retired than working (thanks to a rabbi trust) and my expenses are less. Did not need the extra income at all.

  • Christopher - Thursday, September 27, 2007, 3:10PM ET  Report Abuse

    • Overall: 2/5

    I gave this article a fair because of his main recommendation - save 12.5% of a person's salary. That's just too much of a leap for the average person so what ends up happening is the person saves nothing. A better suggestion is to start saving $50/month for whatever goal (in this case, we are talking retirement). As a person starts to see that balance grow, they then will get the natural urge to max. contributions out. I know this is what happened with me. It's a weird psychology - "if I can't do what I am not supposed to, then I wont do anything." Because of this, many years, we didn't contribute at all to our Roths. Many years we did. If I could go back and do it all over again, instead of just throwing money at every once in awhile, I would have had $100/month deducted and never missed it. But with our kid's college funds, we got the best results when we just said, "$15 every 2 weeks for both of their funds." In 3 short years, we have $13,000 set aside for their college. It's amazing, but I am living proof that "consistency outperforms volume of money saved." Financial planners have a way of issueing advice that backfires. I don't fault him as this advice he issued is party-line.

  • Happy Dad - Thursday, September 27, 2007, 12:52PM ET  Report Abuse

    • Overall: 4/5

    Great article. I have a question for a future article. I am currently enrolled in a 401(k) that is maxed to my employer's contribution. Now they are offering a Roth 401(k), which I think would be beneficial because I don't really pay any taxes anyway (everthing is given back in refund). However, we do have the option of having our yearly bonus placed into the Roth 401(k). Would this bypass the higher tax rate on the bonus?

  • Yahoo! Finance User - Thursday, September 27, 2007, 12:48PM ET  Report Abuse

    • Overall: 4/5

    Find a company that has a rediculously good matching program. For example, I am required to contribute 2%, and the company matches 7.5% for a total of 9.5%. For the next 10% that I contribute, the company matched 1/3 of it. Therefore, if I contribute 12%, my company contributes 10.8%, bringing the total up to 22.8% without even trying very hard. Anything I contribute over 12% is not matched, but I can add up to the Federal limite. Add the fact that the company match is 100% immediately vested, and you are set to go.

Showing comments 6-35 of 131<< PreviousNext >>

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