Great questions. Let me start by saying this: If you want to build a secure financial future for you and your spouse, you absolutely must Pay Yourself First. Paying Yourself First means putting aside a set percentage of every dollar you earn and investing it for your future in a pretax retirement account, like a 401(k) plan.
How much should you Pay Yourself First? Here’s a simple rule of thumb: To be fair to yourself and your future, you should aim to Pay Yourself First at least one hour’s worth of income every day -- which works out to be about 12.5 percent of your gross income.
Paying yourself back for an hour a day makes a lot of sense if you start relatively young -- let’s say 25 or 30. But the number-one thing you can do to ensure a richer retirement is to max out your plan. In other words, commit to making the maximum contribution allowed. This year, the maximum 401(k) contribution allowed by the IRS is $16,500.
Only you and your partner can determine what your personal goals are when it comes to saving for retirement. How much should you save? The realistic answer is: as much as you can. There’s no better time than right now to start saving for your future. So make the decision today to start Paying Yourself First. Enroll in your plan. If you’re already enrolled, increase your contributions. If your company doesn’t offer a 401(k) plan, set up an Individual Retirement Account (IRA) instead.
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