Does the 401(k) program have any effect on Social Security?
The contributions to a 401(k) plan do not affect Social Security benefits. The 401(k) is a personal savings retirement plan intended to supplement Social Security. As individuals we are able to defer up to $15,000 a year into the plan, although most people don’t know that and many can’t afford it. This year, the catch-up contribution has increased to $5,000 for workers who are over the age of 50. Financial advisers determine what the clients’ retirement financial goals are and then direct them by providing a financial road map. Is there a common thread of advice that you give to all clients? Most 401(k) plans offer employer matching funds. That’s free money you have to take advantage of to get the full benefit of the plan. Even before we sit down to talk about where to invest the funds, I make sure that the client has contributed the maximum amount allowed to gain the employer match. By contributing to a 401(k) plan you also get immediate tax savings on invested money, and you defer pa
