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When it comes to saving for retirement, one of the most important steps you can take is to invest in a 401k plan. But how much should you contribute to your 401k?

The answer to this question depends on a few factors, such as your age, income, and personal financial goals. Generally speaking, you should aim to contribute at least 10 percent of your salary to your 401k plan each year. This amount may sound like a lot, but it’s important to remember that the money you contribute to your 401k will grow over time, thanks to the power of compounding and tax-deferred growth.

If you’re able to contribute more than 10 percent of your salary, you should do so. Increasing your contribution rate will help you build a larger nest egg for retirement. For example, if you’re able to contribute 15 percent of your salary to your 401k each year, you’ll be able to save significantly more money for retirement than if you only contribute 10 percent.

In addition to increasing your contribution rate, you should also consider taking advantage of any employer match that’s available. Many employers offer to match a certain percentage of their employees’ 401k contributions, up to a certain limit. This is essentially free money, so you should always take advantage of it if it’s available.

Finally, you should also consider investing in a Roth IRA in addition to your 401k. A Roth IRA is a retirement savings account that allows you to contribute after-tax dollars and then withdraw the money tax-free in retirement. This is a great way to diversify your retirement savings and ensure that you’re taking full advantage of all the tax-advantaged retirement savings options available to you.

Overall, it’s important to remember that the amount you contribute to your 401k should depend on your individual financial situation. You should aim to contribute at least 10 percent of your salary each year, and if you’re able to contribute more, you should do so. Additionally, you should take advantage of any employer match that’s available and consider investing in a Roth IRA as well. By taking these steps, you’ll be able to build a larger nest egg for retirement.