tag:blogger.com,1999:blog-1378394590138106208.post6034021076744269233..comments2010-06-15T19:07:10.910-07:00Comments on Living frugally in and around Phoenix...: increasing the value of your 401Kfrugalphxhttp://www.blogger.com/profile/16625655797678334690noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1378394590138106208.post-42032749584831432562010-01-20T18:44:47.419-08:002010-01-20T18:44:47.419-08:00Most 401k's don't limit the percentage of ...Most 401k's don't limit the percentage of an employee's salary that the employee is allowed to contribute. Instead, they let the IRS annual max ($16,500 for 2010) be the upper limit. If contributing more than 10% seems higher than you can manage right away, try getting there in annual increments of 1% of your gross pay. For example, let's say you're currently contributing 5% of your salary and you make $50K/year. An additional 1% would be another $500/year. Divided by 24 (assuming you're paid 2X/mo) and that works out to about $21/check. Remember that would be $21 on a pre-tax basis. What you are going to miss from your paycheck is only about $16. I challenge anyone to notice a difference in their lifestyle by having 1% less in their paycheck after taxes. Mark your calendar to make another 1% increase the same time next year, and before you know it, you're contributing some real $ to your account. Don't get me wrong, the previous suggestion of contributing 10%+ now is a much faster way to get there, but for those of you who simply can't get your head/budget around that number, start small BUT AT LEAST START!<br /><br />Suerte,<br />PacoAnonymousnoreply@blogger.com