Starting a new job always comes with a hectic first week of paperwork. More than likely, one of the documents is about investing in your company’s 401(k) program.

If you grew up in a household like mine, the importance of investing in your 401(k) account was hammered into you but let’s say you didn’t set up your 401(k) account right away.

Maybe the thought of investing for your future seemed like a pipe dream when student loans, car payments, and buying furniture that isn’t Grandma’s hand-me-down was looming in your mind. Or the process and decisions of setting up a 401(k) account felt intimidating and overwhelming to you.

The first point is trickier. Money is typically pretty tight in our 20s as we are building our earning power. I totally understand why prioritizing our current needs seems to be more important than our future needs. But hopefully, through this conversation, I can convince you that even starting with a small amount can go a long way.

The second point though, being intimidated by the setup process, is something I can help with. This is definitely a topic that should be taught in school, but now having gone through this multiple times, I can assure you that setting up a 401(k) account is an easier process than you think.

In today’s episode, I am going to walk through 4 steps to setting up your 401(k) account, discuss decisions you are going to have to make, and share some guidance along the way.

Key Takeaways:

Why 401(k) accounts were established by Congress
How to initiate the setup process
The difference between a Traditional and Roth 401(k)
How to choose which account is best for your situation
How to calculate your employer match
2023 401(k) employee contribution limits
How to decide how much to contribute to your 401(k)
How to choose an investment option that is right for you
How much should I be paying in investment fees
How to automate investing using target-date index funds

Mentions:

How to Get Started Investing, the Cost of Actively Managed Funds, and a 2-Step Plan to Retire in 15 Years | E57 Jeremy Schneider - https://tsirpodcast.com/57

Hidden Cost of Investing: 3 Common Fees and How to Stop Paying Them | E94 - https://tsirpodcast.com/94

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