Maximizing my 401K

It has been a lot of work and a long time coming but at my companies open election period every 6 months I have been increasing the amount deducted from my paycheck for my 401k. I am now 28 years old and have been contributing to my 401k since I was 21 and I regret not doing this when I first was able to contribute to my retirement account.

Although back then maximizing would have made it impossible to live, however, had I put at least the full amount my employer matched it would have been better than the measly 2% I started out with.

On July 1, 2010 I will make the final step from my current 10% to the maximum allowed which is 15%. This is a large jump and will reduce my take home pay by quite a bit, however, I have spent the past 12 months reducing my frivolous spending, adhering to a simple budget, and learning to live on less.

Looking back last year was the first year I began maximizing my Roth IRA, but if I could do it all over again beginning say at 25, when I started to make enough money to live on and contribute to retirement, I would have maximized my 401k first because of the huge tax advantages of reducing my adjusted gross income with pretax withdrawals as well as my companies matching. Although I regret not doing this earlier, live and learn and pass it on, I feel it is better late than never. I know lots of people who have 10 years on me who haven't yet maximized their retirement savings. My recommendation for everyone working is to take care of yourself first by paying yourself first. It can automatically happen with a 401k provided from your employer so why not invest the most towards a happy and perhaps wealthy retirement.

I have mentioned this tool before in previous posts however I will recommend it again as it is quite accurate as predicting payroll adjustments and how they affect take home pay.

How Will Payroll Adjustments Affect my Take Home Pay