Tags: Retirement | 403b | how much | contribute

How Much Should You Contribute to Your 403(b)?

By    |   Monday, 04 May 2015 04:05 PM

With allowable contributions of $18,000 a year that include employer matching contributions, a 403(b) plan is a great way to build for your retirement. The plan is similar to a 401(k) account, however it is only for employees of schools, government, hospitals or non-profit organizations.

The contribution you make depends on your particular financial situation at the time. Younger workers haven't been in the workplace as long as older employees, so their contributions might be limited. It's a start, however, so put in as much as you can.

Free Retirement Calculator: When Can You Retire? — Click Here to Find Out

This is particularly true when your plan includes employer matching contributions. The company contributions vary according to the plan. It may match 50 percent of your contribution or even more. That's free money to help build up your account fast.

Like any other retirement plan, financial experts often encourage contributions of at least 10 percent of your salary. You can increase this percentage as your career and income rise. It all depends on what you can afford.

Remember, the money you save, especially with an employer matching contribution, pays off significantly. Think about your finances and unnecessary spending habits you might have. For example, instead of dining out every day, a portion of that expense can be put towards some of your contributions instead.

Your 403(b) plan also allows you to take out money without a tax penalty when you retire at age 55 or older. Other qualified retirement accounts, such as an IRA, restrict penalty-free withdrawals to age 59 and a half. The more money you put in now, the earlier you can retire, if you choose.

How Soon Can You Retire? Free Test Shows You When — Click Here

When you have more money to contribute, you might consider an IRA for more retirement saving advantages, according to U.S. News.

You might have reached a point where you maxed out your contributions and the employer matching funds. If you have more money to contribute, you can open an IRA account.

An IRA usually has a more diverse investment selections. Some 403(b) plans may be limited in what they offer. Your IRA could build up even faster with individual investing to complement your plan at work.

Don't forget about additional catch-up contributions allowed for employees aged 50 or over. You can contribute an additional $6,000, according to IRS regulations for 2015.

An Extremely Simple Way To Determine If You're Ready To Retire — Find Out Now

© 2017 Newsmax. All rights reserved.

   
1Like our page
2Share
FastFeatures
With allowable contributions of $18,000 a year that include employer matching contributions, a 403(b) plan is a great way to build for your retirement. The plan is similar to a 401(k) account, however it is only for employees of schools, government, hospitals or non-profit organizations.
403b, how much, contribute
417
2015-05-04
Monday, 04 May 2015 04:05 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved