Getting a Raise? Be Sure to Increase Retirement Account Contributions
Michael says that it’s a great time to increase retirement account contributions, especially if you will get a raise. “If it’s a 3 percent raise, increase your 401K contributions by 1 percent, so you never miss that extra money in your pay check.” Michael describes this as tax-deferred compounding growth – because you won’t pay taxes until many years in the future.
Increase Retirement Account Contributions Until It Hurts
Michael recommends increasing retirement contributions “until it hurts.” If you think you are at your threshold, add another percent and see if you really are. You can always contribute less if you find you need the money in your paycheck now.
He also reminds listeners to be sure to contribute at least to their corporate match. That’s free money!