This is question number one in Money Magazine’s four questions you have to answer to get on track for retirement. A very telling graphic is the one where they show you how much you’ll have in retirement if you start maxing out at what age.
If you start when you’re 30, given 10% annual growth, you’ll have $1.1 million by the time you’re 65. Start five years later and you’re only looking at $860k. Wait until you’re 45 to start saving, it’s now down to $461k.
Maxing out your 401k is as close to a sure thing as you’ll get when it comes to retirement because you’re taking the aspect of saving and coupling it with the power of compounding interest and pre-tax contributions. Together, all three factors will help ensure a more financially comfortable retirement than if you didn’t utilize a 401k.