4 Reasons You Shouldn't Max Out Your 401(k)
The advice, "Go big or go home," can apply to many situations in life, but it's not always the right strategy for your 401(k) contributions.
Cutting back on retirement savings seems counterintuitive, especially as the U.S. faces a retirement crisis. A recent analysis by The New School's Schwartz Center for Economic Policy Analysis concludes that two of five older workers and their spouses will experience a lifestyle decline in retirement. Specifically, if workers who are currently in their 50s retire at age 62, some 8.5 million people will fall below the federal poverty level. That means their incomes will be less than $23,340 for singles and $31,260 for couples. And the cause of this income decline is -- you guessed it -- inadequate retirement savings.
The maximum you can contribute to your 401(k) in 2019 is $19,000, or $25,000 if you're aged 50 or older. If you keep up with those contributions for 20 years and earn a 7% return, you'll have stored up about $836,000. And that seems pretty adequate, at least as a starting point.
Source Fool.com
