3 reasons to really celebrate the upcoming 401(k) Day

Sep 6, 2020, 4:05 AM
(AP Photo)...
(AP Photo)
(AP Photo)

Celebrations are meant to commemorate something specia – —a birthday, an anniversary, or a new job.

While it might not seem that exciting, I want to open your eyes to the fact that if you have a 401(k), that’s also something worth celebrating.

In fact, having a 401(k) in your benefits package is a big deal. Roughly half of Americans don’t have access to a work-based retirement account.1 <https://protect-us.mimecast.com/s/4wqGCQW56gHnk5MFxPWgF?domain=longevity.stanford.edu/>

National 401(k) Day falls on the Friday after Labor Day, making it Sept. 11 this year. Here are three reasons why I hope you choose to celebrate 401(k) Day:

One day, your 401(k) will become your paycheck

Think of your 401(k) as a big bucket where you set aside money for your future.

Every time you get a paycheck, you contribute a percentage or a dollar amount to your 401(k). Your 401(k) is not a vacuum sucking your money out of your pocket. It’s an incredible investment vehicle that provides a space for compound growth to work its magic.

But if you don’t put anything aside now, you won’t be packing your bags later to take a dream vacation, or visit the grandkids.

You’ll be packing your lunch for yet another day at the office! Every time you contribute to your 401(k), think of it as another paycheck for your future self.

Your 401(k) gives you control of your financial future

People are more aware than ever about money these days.

With the shutdown from the pandemic and the stock market taking us on a roller coaster ride, there’s a sense of uncertainty in the air. Everyone is on pins and needles, hoping for handouts from the government.

It’s time we learn the importance of saving and investing by ourselves, for ourselves.

Uncle Sam, Social Security, or the next stimulus package won’t save the day. Your financial future is in your hands, and your 401(k) is a convenient way to make progress for yourself and your family.

Put more money in your pocket with 401(k) tax breaks

401(k)s give you great tax advantages, but they vary depending on which type of account you have:

1. The traditional 401(k) is funded with pretax money, meaning your money goes into your account before it gets hit with federal and state income taxes. This lowers your taxable income for the year. However, you’ll pay income taxes on that money in retirement.

2. The Roth 401(k) allows you to invest after-tax dollars, which doesn’t give you a tax break immediately.

However, you get to enjoy tax-free perks during retirement. When you start withdrawing money penalty-free at age 59½, you get to keep every single penny of the money you’ve put into that account.

If your company offers a Roth 401(k) option, take it. It will help you put away more now, and enjoy major tax-free advantages during retirement.

My hope for you is that you come up with a plan for your future, stay focused, and give yourself a reason to celebrate down the road.

I don’t know about you, but I’m grateful to live in a country that offers so much opportunity to build wealth and chase down our dreams.

Don’t make excuses, make progress!

Dave Ramsey

(Unsplash Photo)...
Dave Ramsey

Dave Ramsey says: Be honest in uncomfortable situation explaining better job offer

When handed a great opportunity shortly after starting a job elsewhere, walk into your boss’s office and lay out the whole situation truthfully.
2 days ago
(Pexels Photo)...
George Kamel

How to manage finances with inflation through the rest of this year

Whether we want to admit it or not, inflation is here, and there’s plenty of ways you can beat it through the end of the year.
4 days ago
(Flickr Photo/TaxRabate.org.uk)...
Dave Ramsey

Dave Ramsey says: Pay off credit debt, then keep rolling to straighten finances

When the rule of paying off debts from smallest to largest doesn’t apply, attack the one with the larger interest rate first.
9 days ago
(Unsplash Photo)...
Kristina Ellis

Here are 3 easy ways high school seniors can increase their productivity

If you're a high school senior, it’s so important to get your priorities set and get your life organized as you start this academic year.
11 days ago
(Pexels Photo)...
Dave Ramsey

Dave Ramsey says: Debt-free couple should sign up for level term life insurance

A debt-free young couple should find good 15- or 20-year, level term life insurance policies, with coverage amounts of 10 to 12 times their incomes.
16 days ago
(Pexels Photo)...
Dave Ramsey

Here are ways to boost your holiday budget, starting now

While you might not be ready to hang up the mistletoe, it's never too early to get a head start on saving money for the holidays.
18 days ago

Sponsored Articles

Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
3 reasons to really celebrate the upcoming 401(k) Day