Should You Max Out Your 401(k) This Year?
Want to jump-start your nest egg and make saving enough for retirement a whole lot easier? Then maxing out your 401(k) this year might be a smart move for you -- emphasis on might. While it's undeniably great for your retirement savings, there are other factors you need to weigh when deciding whether it's a good choice for you. Here's a look at the pros and cons of maxing out your 401(k) in 2021.
You can contribute up to $19,500 to a 401(k) in 2021, or $26,000 if you're 50 or older. If you keep that money in your retirement account for a few decades, you'll end up with serious cash. A $19,500 contribution that earns a 7% average annual rate of return over 30 years will end up being worth nearly $148,500. That's $129,000 in investment earnings -- enough to cover a few years of retirement for most people.
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Source Fool.com
