Coach Jean explains why maxing out your 401(k) cuts your taxes, grows your money faster, and gets you closer to early retirement. For 2024, you can contribute $23,000 a year, or $30,500 if you're 50 or older with the catch-up provision.
Questions this video answers
$23,000
$7,500
May 4, 2025
Steve Chen
Chapters
Hello everyone and welcome back to the.
New retirement YouTube channel where we help you take financial wellness into your own hands with our Do It Yourself financial planning software. I'm Coach Jean, a financial wellness coach.
And in this video we're going to.
Be discussing Maxing out your employer sponsored retirement plan contributions.
If you've captured your employer match and.
Made it through plays three, four and.
Five, you can focus any additional income you have to towards maxing out your retirement plan contributions.
This is not only an acceleration of.
Your retirement savings, but it also provides.
You with significant tax advantages.
Maxing out an employer sponsored retirement plan.
Such as the 401k can offer numerous.
Benefits for individuals planning for their financial future.
Let's review some of the key advantages.
First, advantage is well, well tax advantages.
Contributions to an employer sponsored retirement plan.
Are often made with pre tax dollars.
Reducing your taxable income for the year.
This can lead to immediate tax savings. Next, reduced taxable income.
Lowering your taxable income through maxed out contributions can place you in a lower.
Tax bracket, resulting in additional tax benefits.
Beyond the immediate savings on the contributions. Next, we have compound growth. By contributing the maximum amount allowed, you can take full advantage of compounding over time. Compound growth allows your contributions and earnings to generate additional returns, potentially leading to.
Significant long term wealth accumulation.
Now Early Retirement Options Building a substantial retirement nest egg may allow for early retirement. If that's your goal, Maxing out contributions.
Can expedite the process of reaching your retirement savings target.
And finally, peace of mind.
Knowing that you're taking full advantage of.
Your employer sponsored retirement plan can provide.
You with peace of mind, reducing financial stress and increasing your overall sense of security.
Now that you know the benefits of.
Maxing out your contributions, we can discuss the contribution limits. Each year, the IRS reviews and sometimes adjusts the maximum contribution amount to account for the impact of inflation on the value of money. In 2024, the maximum annual contribution limit.
For a 401k is $23,000.
Those age 50 or older can contribute.
An additional $7,500 in catch up contributions. Utilizing New Retirement's financial planning software is.
One of the easiest ways to forecast the growth of your 401 and and.
Help you build a financial plan tailored.
To your goals and your ideals.
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