We all dream of a life of leisure during our retirement years. National 401(k) Day, celebrated every year on the Friday after Labor Day, prompts us to check in on our nest egg. Don’t let another day go by without learning why you should save for retirement through your company’s 401(k) plan, or how to save for retirement if you don’t have a plan.
Not only is this day set aside to recognize 401(k)s, but it could also be a great way for government employees to recognize their contributions to the Thrift Savings Plan (TSP)!
The History of National 401(k) Day
National 401(k) Day began in 1996 by the Profit Sharing/401(k) Council of America (PSCA), known today as the Plan Sponsor Council of America. The Friday following Labor Day (Monday) was chosen so employees can “start the week with Labor Day and end the week with Retirement.” This holiday promotes retirement savings education and PSCA encourages companies to give their employees the 411 about their 401(K) in fun, easy-to-understand ways. Retirement planning is a complex topic – rules change as quickly as the market changes. Less than 40% of Americans can answer basic questions about their 401(k), so it’s great to have a holiday dedicated to learning about them.
If your employer provides a 401(k) plan, you can use that resource to start your retirement plan. However, if you’re self-employed, you can start your 401(k) through a financial institution. There are two different types of 401(k) – traditional and Roth. The traditional route takes a percentage of your paycheck – approved by you, of course – whereas through the Roth 401(k), contributions are made with money you’ve already paid on taxes, meaning your money grows tax-free.
5 Tips for Maximizing Your 401(k)
Start contributions early It’s never too late to start saving for retirement but the key to maximizing retirement savings is by starting early. If you or someone you love is in their 20s, start saving today whether through a 401(k) or IRA.
Take advantage of matching contributions. Most employers match their employees’ contributions by a certain amount – for example, they may match 50% of your contribution up to 6%, which means if you contribute 6% into your 401(k) account, they will contribute 3%.
Select personally compatible investments. The typical 401(k) plan also allows you to select from a variety of investments that fit your investment preferences.
Avoid early withdrawals. Withdrawals result in penalty fees as well as tax payments which you likely avoided when initially saving the money.
Check in periodically. These long-term investments are easy to forget about but you should monitor as you go in order to make adjustments as needed.
National 401(k) Day serves as a valuable reminder of the importance of securing your financial future through retirement planning. Whether you’re already enrolled in a company’s 401(k) plan or considering starting your own, this day encourages us all to take control of our financial destiny.
As we commemorate this day, let’s remember the history of its inception and the mission it upholds by promoting retirement savings education in an accessible and engaging manner. So, don’t delay—start building your nest egg today and look forward to a future of well-deserved leisure and financial security. Happy National 401(k) Day!
Resourced Content: NationalDayCalendar.com
