Whether you’re trying to calculate how much to contribute to your 401(k) for the first time or how to max out your 401(k), this video walks you through the calculation I used to figure it out. It sounds intimidating at first but it’s really not as complicated as it seems and contributing to your 401(k) is so worth it in the long run! Get your retirement money organized! This may not be the best way to calculate it but it’s just the way I do it.
Let me know if you have any questions in the comments down below and don’t forget to give this video a LIKE if you found it helpful!
– – –
THANK YOU SO MUCH for watching!
LIKE if this video helped you.
SUBSCRIBE to see more videos.
INSTAGRAM:
TWITTER:
ETSY:
EARN CASH BACK SHOPPING ONLINE:
TRY INFLUENSTER TO BE SENT FREE PRODUCTS TO REVIEW:
TRY LETOTE FOR FREE:
GET STYLING FEE WAIVED & TRY SHORT STORY BOX:
GET $30 OFF RENT THE RUNWAY:
– – –
CAMERA:
// Sony A5000
MUSIC:
// Music by Joakim Karud – Lullaby
– – –
Disclaimer: Everything discussed in this video is my opinion and should not be taken as investing advice because I am not an investment advisor or financial advisor. This video is for informational and educational purposes only.
#401kcontribution #maxout401k #calculate401k…(read more)
LEARN MORE ABOUT: 401k Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
HOW TO CALCULATE YOUR 401K CONTRIBUTION AMOUNT (& MAX OUT 401K)
A 401(k) is a great way to save for retirement, and maximizing your contributions can help you build a substantial nest egg for your golden years. However, determining how much to contribute to your 401(k) can be a confusing process. Here is a guide on how to calculate your 401(k) contribution amount and how to max out your 401(k).
1. Understand your plan
The first step in calculating your 401(k) contribution amount is to understand your company’s plan. Some employers offer a matching contribution up to a certain percentage of your salary, while others may have specific rules for eligibility and contribution limits. Make sure to read your plan documents and speak with your HR department to understand the details of your 401(k) plan.
2. Calculate your maximum contribution
The IRS sets limits on how much you can contribute to your 401(k) each year. The maximum contribution limit for 2021 is $19,500 for individuals under the age of 50, and $26,000 for those aged 50 and over. To figure out your maximum contribution, consider your age and your ability to save. For example, if you are 30 years old and want to max out your 401(k), you would aim to contribute $19,500 for the year, or $1,625 per month.
3. Determine your contribution percentage
If your employer offers a matching contribution, it’s important to take full advantage of this benefit. Many employers match a percentage of your contributions, such as 50% up to 6% of your salary. To figure out your contribution percentage, divide the amount you want to contribute annually by your total salary. For example, if you make $50,000 per year and want to contribute $5,000 annually, your contribution percentage would be 10%.
4. Adjust for tax benefits
Contributions to a traditional 401(k) are made with pre-tax dollars, which means you can reduce your taxable income by contributing to your 401(k). This tax benefit can help you save even more for retirement. To account for the tax savings, you may need to adjust your contribution amount to reach your desired take-home pay.
5. Review and adjust regularly
Life circumstances can change, and it’s important to review your 401(k) contributions regularly. You may receive a raise, get a bonus, or have changes in your financial situation that can affect your ability to contribute to your 401(k). By reviewing and adjusting your contributions as needed, you can ensure that you are on track to meet your retirement savings goals.
In conclusion, calculating your 401(k) contribution amount and maximizing your contributions can be a bit complex, but it’s an important step in ensuring a comfortable retirement. By understanding your plan, determining your maximum contribution, considering your employer’s match, and accounting for tax benefits, you can develop a strategy to make the most of your 401(k) savings. And remember to review and adjust your contributions regularly to stay on track towards your retirement goals.
Whether you're calculating how much to contribute to your 401(k) for the first time or want to max out your 401(k), the calculation in this video will help you figure it out! I know it may get overwhelming but stick it out and do the calculation and just start contributing something! You won't regret it and your future self will thank you! Let me know if you have any questions 🙂 You got this!
If you're not grossing over a $100000 and you have other responsibilities as an adult. It's pretty much impossible to Max out your 401K at 22500.. I put enough in to get the match amd ill fund other brokerages or IRAs with what I can on the side.
thank you! I hunted high and low for this information on how to calculate the contribution so I can get the max… everything points to how much you want to save? or how much can you contribute?.. That is not my concern with most websites and advisors say or do. Now I have tangle goal that I need to reach. THANK YOU!
i did not understand anything, have no idea what you are talking about , can you help me to do my 401k?
$394.23 per week
Nice video! I've realized by playing around with the formula that the max-out percentage can be calculated a bit more easily by simply computing:
(planned annual 401(k) contribution) / (annual gross income)
In my case, in 2021 (targeting 2022) this is:
20,500 / (my pre-tax annual salary)
which results in 0.XX, which would imply a XX% contribution to my own 401(k) per paycheck.
If I'd like to see how much I'm putting in my 401(k) is per pay period, I can work backwards like this:
(my pre-tax annual salary) * 0.XX / (number of paychecks per year)
What does it mean to max out 401k? Does it mean to put whole paycheck into 401k?.
So is this correct?
Example : 19,000 / 26 = $730
$730 / (your single pay check stub before tax) $1,160 = 0.62931034482759 move decimal which is 62%
Is that my maxed out percentage??????
Most companies will not let you contribute over the maximum. What is important is if you’re going to max it out then you need to do it on the last pay period to take full advantage of the match.
Lucky you
You answered the question I was looking for and thinking overnight haha. Thanks.
You won't go over the $19,000 IRS limit. Once you've reached your max even as early as Sept. for example, it'll stop there then for the remainder months, you'll get more take home pay just in time for the holidays 🙂
The match with your employer added up to 730 per pay period??
If you're yearly salaried wouldn't it just be [$19,000/salary] for the percentage (or like you said whatever the max is for the given year if not $19,000)?
Really nice video and very informative!! I think it’s so important to contribute to your 401k!! Great video!!!
Thanks for sharing. This is super helpful! Keep up with the videos.