Give Yourself a [Retirement] Raise

In a recent survey, nearly 90% of jobseekers considered a 401(k) plan a must-have benefit.¹

Defined contribution plans, such as 401(k) and 403(b) plans, have become an important vehicle for retirement savings for many people because of their numerous advantages:

1. It’s an easy and consistent way to save because contributions are automatically deducted from your pay.
2. There’s often an employer-matching 401(k) program. If your employer offers this program, make sure to contribute at least up to this amount. For example, if your employer matches 100% of your contributions up to 3% or 4% of your total compensation, it’s essentially free money toward your retirement.
3. You can give yourself a [retirement] raise. Instead of contributing only 5% of your annual salary, a 7% or 10% contribution could add hundreds of thousands of dollars over time, as shown in the chart below.

Hypothetical Growth of 401(k) Investments

With and Without Employer Match, Employee Contribution of 5%, 7% or 10%

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The maximum contribution for a 401(k) or 403(b) in 2025 is $23,500 with a $7,500 catch-up for those 50 and over. Also, if you are 60 to 63 years old, you can contribute an additional $3,750. Already contributing the maximum amount? Consider opening and contributing to a Traditional or Roth Individual Retirement Account. Speak with a Jemma Financial Advisor by calling 855.662.2121 or click here to get started.

1 2023 401(k) Participant Study, August 2023. Charles Schwab.