5 Reasons To Invest In A 401k Retirement Plan
A 401k is a great way to save up some money for your retirement. In fact there are 5 great reasons to invest in them.
Before we get into those reasons let us look at the question, what is a 401k? This is simply a retirement plan where employees can save a portion of their income and have it grow tax free until retirement. This plan has helped out many people since it was created for these simple reasons.
1. Tax Free
The biggest benefit it has is that it is a taxed defered retirement plan. Of course you do have to pay taxes on your money when you eventually pull it out, but while it is in the account it is enjoying growth without being slowed down by taxes.
2. Employers May Add Money
Many employers will match your deposits or give you some sort of insensitive for saving up for retirement. If your employer decides to match you 1 for 1 and you invest $700 into your 401k your employer would then deposit an additional $700 into your plan, it is free money.
3. Average Stock Market Return
The yearly average stock market return tends to be about 10% that beats many of the other forms of investing that are out there. When you combine this with the free money you can receive and the tax free growth it can be a great way to save up some money.
4. Managed Safely
A 401k can make a nice safety net because the money inside it is normally managed with caution. So if you have a 401k it will allow you to always have some money around just in case you find yourself in an emergency situation and you simply need to use it.
5. Hardship Withdrawals
There are a lot of hardship rules that can let you take some money out during certain emergency situations. You can also use the 401k hardship rules to get into a first home or even pay off some college loans without getting hit by the normal 10% penalty that comes with an early 401k withdrawal.
