Hola bellas! Have you thought about having enough money when you retire? How about having so much money that you’re able to retire early?

That would be amazing!  Setting aside money in a 401(k) is a method you can use to start saving and investing money for retirement.  A 401(k) is a saving and investing plan offered by employers.  Your contribution is deducted from your paycheck every month, and the contributions you make are not taxed.

Some of the benefits of contributing to a 401(k):

• Lots of employers match a portion of the money you contribute. For example, many employers match 50%-100% of the money you contribute, up to 3-6% of what you earn annually.

• Tax savings on contributions:

The money you contribute is taken straight from your paycheck before the IRS taxes it.

Contributions can lower your income taxes. For instance, let’s say you earn $40,000 per year, and throughout the year, you contribute $10,000, this means that it will lower your taxable income.  Your taxable income will only be $30,000, which will save you money by not having to pay taxes off of the $40,000

• If you switch jobs down the line, you can take your 401(k) contributions with you, and you can roll it over to a new retirement savings account.

Contributing to your 401(k) while you’re young and have fewer responsibilities is a great idea.  The money you put in a 401(k) will grow a significant amount over time. To give you an idea, if you’re a 21-year-old who earns $35,000 a year and you contribute 6% per year ($2,100), and your employer matches 50% of your contributions, up to 6% with a 7% average investment return, when you’re 65 years old, your 401(k) will be worth $869,737!!!! That’s with only contributing $2,100 per year! As you earn more, you can contribute more, and your 401(k) can be worth even more!!!

Hispana Bella recommends you contribute the maximum amount that your employer matches to take advantage of that free money that your employer is giving you.  I think that’s one of the regrets that I have.  I wish I would have started contributing earlier, and once I started making contributions to my 401(k), I wish I would have made more substantial contributions to get the free money that my employer was matching.  Think about it; how often does anyone give you free money to invest?  Almost NEVER!  Take advantage of that and no se duerman bellas (don’t fall asleep on that opportunity)!

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