This question is posed frequently to financial advisors. The answer is not the same for everyone. Based on resources, expenses, years until retirement, an individual’s need differs. However, most of my contemporaries would agree it is good to contribute as much as you can. A very minimum savings level for employees who receive an elective matching contribution from their employer is the minimum amount of savings to receive the maximum amount of match. For example, an employer provides a 100% match up to 3% employee contribution. The employee is wise to contribute 3% of their current income to receive the immediate match from their employer. The employee actually receives 6% savings, 3 from their contribution and 3 from their employer. Other plans may provide a 25% match up to 5%, or 25 cents on the dollar up to a 5% contribution. Be aware of the matching contributions available to you and maximize the benefit.

In the case of non-matching contributory plans and contributions beyond those matched, examine your own situation and determine the best level of contribution to pursue your goals.


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