November 8th 2023.
Niv Persaud, a certified financial planner in Atlanta, is using her own experience to make sure others are making the most of the 401 financial plans offered by their employers, regardless of their relationship status. As Persaud told the Daily Mail, it is important to sign up for these plans, especially if they match funds, as it is "truly free money".
A 401 match is when an employer matches some or all of an employee's contributions into their retirement account. This formula can vary from employer to employer, with some matching a percentage of the employee's contributions, while others will match contributions up to a certain dollar amount. This lesson was learned the hard way by Persaud herself. She focused on bills and expenses during her marriage, while her husband invested in his employer's 401 plan, with a 401 plan with a match. However, she did not sign up for it.
After the marriage ended, Persaud realized that she had missed out on thousands of dollars in 401 retirement sayings. As she told the Daily Mail, “One of the benefits of my own mistake is that when clients come to me, I don’t judge because I’ve been there, and I know it just happens”.
The National Bureau of Economic Research found that 1 in 4 married couples lose more than $700 a year on average by not prioritizing the more generous 401 matching plan offered by their employers. Additionally, research showed that in many couples, only one person was contributing to a retirement plan, while the other ignored the plan with the larger match. Furthermore, some married couples split their retirement savings evenly when they should have shifted their money into the account with the larger match.
Today, Americans can contribute up to $22,500 into their retirement accounts, which is expected to increase in 2024. With inflation on the rise, many retirees are being forced to return to work, making it even more important to sign up for your employer’s 401 plan as soon as possible.
Persaud's goal is to ensure others don't make the same mistake she did and take advantage of their employer's 401 plans. By doing so, they can save money for their retirement, while also taking advantage of any matches that are available.
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