subject: How To Determine The Amount Of Money To Pay Into Your 401k Plan [print this page] The truth of the matter is that a lot of people really don't care so much about their retirement plans. This is because of the fact that a lot of people usually start their jobs worrying most about their student loans and other obligations that one finds oneself immediately he gets the job that he desires.
All the things that he used to dream about like owning a new car, buying better clothes and such-like things all become necessities. For this reason, it is usually very hard for people to start thinking about the 401K plan and other retirement plans that are available.
In this article, we are going to communicate with those people who though may have made up their minds to contribute some money to the 401K plan, they really do not know what the optimum amount is. It is extremely important to point out the fact that there is actually not "optimum" amount. There are several things that will determine the amount that you will need to contribute and these are the three things that we are going to examine here.
Your Current Standards Of Living
The most obvious fact is that you may never be able to achieve the very high standards of living with pension income as much as you will achieve with your salary. It is generally accepted that you should be able to sustain 70% of your current living standards in your retirement. For this reason, you should contribute in such a way as to make sure that these standards are actually maintained.
Your Future Needs
If you will be retiring at 60 and you will be having a 15 year old son at that time, then you need to understand that your needs may be totally different form someone who at the age of 50, has all his kids working and fending for themselves. The person who will be having a 15 year old dependant when he himself is retired, will need to know where the school fees for the child will come from, among many other things. On the other hand, the person who has all his children working does not need to bother about this, but may actually be thinking of the money that will be coming from his children.
Your Current Income
Lastly, you will also need to look at your current income. People who have more money should contribute more to their 401K plans more than those people who earn less than him.
by: David de Souza
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