Making Up Lost Time - Investing In 401k Later In Life
Ideally you want to start saving as soon as possible for retirement in your adult
years but when that has already passed you by you need to focus on making up lost time by investing in a 401k later in life.
Of course, there are always other investment options, and you should take a look at spreading your money out if you have enough, but this type of account is definitely something you should use for a number of reasons.
The first one being when compared with an IRA they have a much higher contribution limit, and if you're in between the ages of fifty and fifty nine years and six months old you can also contribute an additional $5,500 as a catch-up contribution. This is something you want to take advantage of to try and get your savings up to something you'll be able to live on.
The higher limit is a big advantage when you're trying to make up lost time investing in a 401k later in life, but there are other advantages to these accounts, too.
The biggest one that is unique to this option is the contribution match from your employer. Even if it's only one percent of your income this is still something you absolutely want to take advantage of because it's money you won't be seeing anywhere else. Keep in mind that everything in your account will be invested in stocks, bonds, money market accounts and other investments in the plan you've chosen so the more money in the there the more potential for earnings later. That one percent should become a lot more over time.
While investing in a 401k is a great option, you may want to explore additional options to help you make up some of that time. Considering mixing in a Roth, or traditional, IRA as an additional option.
by: Jennifer Quilter
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