Most employers now offer some type of employer-sponsored retirement plan. There are many different types, including 401(k)s, 403(b)s, Simple IRAs, SEP IRAs, and 457 plans. For this blog, we’ll simply use the term “401(k).”
As a general rule-of-thumb, it’s a best practice to set a goal to save 15% of your gross income for retirement. Many employers offer a matching contribution to the retirement accounts that they provide. As a starting spot, try to save the amount in which you can receive the maximum amount of the employer match. For example, if the employer offers a 3% match, go ahead and start with a 3% contribution rate.
Over time, try to increase your contribution rate by 1% each year. By doing so, you can slowly build up the amount that’s being saved, which has a tremendous impact on the long-term balance and growth of the account. Slow and steady wins the race!