401K contributions how much do I put in?

Wow! How old are you? You're saving like somebody nearing retirement. Which is a good thing.

A couple of things.

* Always live within your earnings or well below them if you can. It's a sure fire way to get and stay rich.

* Emergency fund? Do you have one? At least 3 to 6 months of living expenses? If not, less into the 401K and more into your emergency savings.

* At a minimum you need to put in enough to to max out your company match. Free money you just can't pass up.

* Tax deferred accounts are great, especially if you invest wisely and watch it grow tax deferred. The only bad thing about them is you can't access the money in case of an emergency (read emergency fund above).

Good luck. Sounds like you're off to a great start.

There is a max contribution that can be put into the account by an employee. While few people can actually afford to put that much of their check into the fund, they will want to make sure that they at least put the amount that the company matches For instance, if your company allows a 20 percent deposit with a 5 percent match, put at least 5 percent of your check into the 401k. If you contribute $20K to a 401(k) plan, your taxable income is reduced by that amount.

Most advisors recommend contributing only up to the company match of a 401K. After that you should put money into a Roth because the earnings are tax free.

In general, you should put in the maximum you can afford. If you can afford $20K, definitely put it in. The 401K is based on having several decades to grow. The earlier you start, the more you will have at retirement time. The opportunity for growth is more important, in my view, than the immediate tax savings.

UPDATE

The response beneath mine is correct: $16,500 is the 401K limit unless you are over age 50, in which case you can contribute an additional $5,500 per year.

IRA money may well be much less complicated to get entry to parts of your money interior of rules (exceedingly roth) in case you truthfully want it. of course that's frowned upon to take money out of your retirment "nest egg" debts, yet each now and then its useful to comprehend that that's achievable "merely in case" additionally- you will possibly have greater investment possibilities interior of an IRA it incredibly is a attention for some. base line, keep putting money in to attain your objectives. there is greater advantageous than one thank you to epidermis a cat, yet i desire this permits, delight in!

You are NOT able to contribute $20K per year to your 401(k) plan - the limit is $16,500. You should be contributing to a Roth IRA instead of a trad IRA.

you contribute the maximum permitted for that CY. employer matching is nice but irrelevant/not required. this is untaxed bucks; sock it away and forget it.

the IRS never sees these funds as part of your AGI.