I am a Chartered Financial Analyst with a 22 year career in Financial Services at two of the largest brokerage firms in the US. 

My roles were focused on determining which investment products and advice could be available to Financial Advisors.

I retired last year at age 42. I now want to share with you some thoughts on 401ks.

What is employer matching?

A benefit many employers provide where they contribute to your 401k up to a certain amount. 

What’s the optimal amount to contribute to your 401(k) each year?

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It is hard but contribute the max.  It is difficult to pick good investments, but it's easy to save on taxes.

I've always looked at not maxing out my 401k as if I am stealing future me.

Don't steal from future you!

Many people think the optimal amount to contribute to their 401k Plan is up to the company match.

This is partial advice and rather flawed.

The benefit of a 401k plan is the tax deferral.  The employer contribution should be looked at like it's a bonus

But that difference between the allowable max each year and the employer contribution is still considerable opportunity to decrease taxes.

If you contribute $20,500 a year and your tax bracket is 22% then you are investing $4,510 more that you otherwise would have paid in taxes.

For many more thoughts on 401ks Plans including what your Financial Advisor isn't telling you (and may not know) click learn more.

For more thoughts from a retired and credentialed Financial Services industry insider click below.