Half the year is almost over and I haven’t put anything into my 401k retirement yet! How is that possible even? For the full-time job I started last year there is a 6 month waiting period and then I’m eligible on the first day of the quarter. July 1st is the day I can finally start contributing to my 401k with a 3% match! It feels a bit weird to be excited about that but I guess to each their own.
Now the biggest question is if I can max out my 401k this year with only 6 months to contribute! For the first 6 months out of the year I’ve been enjoying a larger paycheck than normal because of the lack of 401k. Having the entire year to contribute to the max limit is definitely something I can do, but with only half a year is it even possible? Well of course anything is possible but it’ll be a hard change and my income flow will be much lower. My husband just started a new job a month ago and he won’t be eligible for 401k until three months are left in the year. I think that I can definitely max out my 401k but I doubt he can with only three months for him. I’m going for it for sure! I’ll miss the extra chunk of disposable income but it’ll go a long way towards my future.
Benefits of a 401k
There are a few really good reasons why I’m doing this. First of all my employer matches 3% so I at least have to contribute 3% to get that! Free money yeah! There isn’t any vesting period but I do have to wait until the end of the year for them to put in the 3%. Secondly I need the tax benefits! California living is pricey and has a very high income tax. If I max out then that’s $17,500 that I don’t need to pay taxes on! Lastly, the most important reason, is that this all goes toward my retirement! Have to watch out for myself because I don’t intend to keep working until I’m 95!
Why max it out?
I really don’t have to max out my 401k but since I’m still young then the more money I put in now means the less I need to put in later. Work harder now and have more fun later! Haha. With compound interest working on my side then making a little sacrifice now will pay off in spades later.
I have one more month of enjoying a lot of disposable income and then there will be a sharp drop in that. I better enjoy that while it lasts! I’m going to go for it and max out my 401k this year!
Are you going to max out your 401k this year?