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Why you need to participate | invest in 401k plan?

Why you need to participate | invest in 401k plan? The pie chart shows the importance of saving now toward a retirement | 401k fund. Not only are Social Security benefits less significant, but the sums are diminishing and the age at which you can begin to receive benefits is higher.

Social Security represents approximately 39% of the average retiree’s income, according to the Social Security Administration.
Traditional pensions are estimated to supply less than 19% of retirement needs, according to the Social Security Administration (2004; most recent report published).

All other need of money at the time of retirement you have to mange. This is the reality!!!!!!!

Also, as you begin thinking about how much you’ll need for a comfortable retirement, you may be started to learn the impact of inflation. At an average inflation rate of 3%, your cost of living would double every 24 years.

You’ll also have to consider the likelihood of increased medical costs and health insurance as you grow older. The average nursing home stay, for instance, now costs more than $75,000 a year and could rise to over $150,000 per year by 2030, assuming an annual inflation rate of 3%.

Traditional pensions are estimated to supply less than 19% of retirement needs, according to the Social Security Administration (2004; most recent report published).

Add that to the 39% or so a year you might expect from Social Security, and you’ll probably still fall far short of your goal.

Fortunately, you have some Options. First is the power of compounding, which takes advantage of time. Tax deferral is another Option. Using investment vehicles such as 401(k) plans or individual retirement accounts (IRAs), you can put off paying taxes on your earnings until you are retired and potentially in a lower tax bracket. Meanwhile, your contributions may be pretax or tax deductible, helping reduce current tax bills.

The more time you have until retirement, the more fortunate you may be. Delaying just months — never mind years — can significantly reduce your results.

By starting early, investing systematically, and benefiting from the potential of compounding and tax deferral like 401k plan, you may in better position at retirement age.

The rising cost of living means you need to plan on an annual retirement income that could be substantially higher than what you spend now.

You may have higher expenses in some things such as medical care, but lower expenses in others.

Retirement income may be made up of pension benefits, Social Security benefits, personal savings like 401k and investments, and income from part-time work.

401k investment is the best choice at present time because your saving start to grow at investment by companies vested parts, tax free earning up to withdraw time means you can use tax money to make money and investment return so without loosing any time just start to invest in 401k plan.



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