Multiplying Your Retirement Income Money

Multiplying Your Retirement Income Money

The need for money during your retirement years is clear enough. The concern that you should have today is whether your savings will be enough to give you the kind of retirement income money that you need. The good thing for those who are employed is that the government provides for a facility where you can actually multiply the amount of your savings in order for you to successfully accumulate your retirement income money.

Under the government-mandated employee-sponsored 401k plan provisions, an employer should be responsible for the creation and design of the 401k plan. The employer elects to set aside a percentage of his monthly income to contribute to his 401k plan automatically. To encourage participation in the 401k plan, employers usually adopt the practice of matching employee contributions. This effectively multiplies the amount of money you are able to set aside for your retirement.

Another benefit of participating in a 401k plan is that the contributions are tax deferred. This means that you do not have to pay for income taxes on your the percentage of your income that you channel towards your 401k. These contributions are invested in a number of instruments as defined under the provisions of the Internal Revenue Code. Employers with sound 401k portfolio management are able to give your retirement money a better chance at maximizing earnings for you. This is a great instrument for those who are not investment savvy and would not know how to spot and take advantage of good investment opportunities on their own.

You can benefit a great deal from your employer’s 401k program. Take note though that any amount that you contribute to the 401k program should be something that you intend to use during your retirement and not in the near future. There are withdrawal rules that you will have to meet and penalties that you will be charged with when you try to withdraw your 401k retirement funds earlier than your retirement.