Why Is 401k Important

Importance in investing in a 401k Plan The most important things high school students have to focus on are good grades, SAT/ACT tests, extracurriculars, and also retirement plans. I am here to tell you today that timeliness is extremely important and to start investing money as early as possible. Many fail to realize the utmost importance of investing in a 401k retirement plan right when you start working. A 401 k plan lets you set aside money into a retirement account for it to be saved and grow exponentially. I believe the best way to save for retirement is through the 401k program. It is beneficial to invest early in a 401 k retirement plan because your money compounds and increases over time, employers match a percentage of your contribution and between 3-6 percent of your gross wages, and you receive deferred tax. It is imperative that one starts saving immediately after working because of the compounding effect of the 401 k plan. The average annual return for investments is about eight percent, which means that every seven years your money would double. According to Practicalmoneyskills.com, assuming 5,000 dollars is saved for ten years, “If you started saving at age 25, stopping at age 35, when you retire at 65 your account would be worth about $787,000. If you started saving at age 35, …show more content…
Starting an early 401k plan is the best way for your money to rapidly grow in your account. With this helpful retirement plan, you can save money to gain an even bigger reward. According to Forbes, “Few Americans are saving enough for retirement, suggesting many workers may face a retirement with a lower standard of living, according to a recent study released by the Schwartz Center for Economic Policy Analysis at the New School.” Let’s face it, you don’t want to be age 65 and have no money left in your retirement account, just because you didn’t start an early 401k