CHICAGO (CBS) — The New Year is a good time to think about new ways you and your family can “Survive This Economy.”
Marcus Wright has one very important New Year’s resolution. He’s increasing his contribution to this 401(k) plan.
CBS 2’s Dorothy Tucker shows us why it’s such a smart move to make.
Marcus Wright works as an IT consultant for a local technology firm. His company offers a 401(k) plan where they match his contributions dollar-for-dollar, for up to 3 percent of his salary.
Wright takes full advantage of the savings plan.
“I want to make sure I’m planning out for my retirement because there’s going to be things Sinora and I want to do,” Wright said.
With his $90,000 salary, Marcus contributes $225 a month and he gets another $225 a month from the company.
“It’s free money. It’s free money,” Said Cheryl Krueger, President of Growing Fortunes Financial Partners. “It’s something the company is helping to support employees, because they’re no longer doing pension plans.”
With the match from his company, at the end of the year Marcus has added $5,400 to his retirement, even though he’s only put in $2,700 of that. He also reduces his taxable income, which means he gets to keep another $675 per year in tax savings.
Pleased with current savings, Wright’s New Year’s resolution is to do more. He plans to increase his contribution from 3 percent to 5 percent. That extra 2 percent adds another $1,800 to his 401(k) and saves an extra $450 in taxes.
“You want to put that away right away. You want to take care of you first so that’s what I’m trying to do,” Wright said.
Marcus, like others who contribute to a 401(k), will have to pay taxes whenever he withdraws his money.
But Krueger says it’s still a good deal, because of the “free money” he gets from the company.