How to Get Rich Off a 401(k)

You’ll be glad you opened a 401(k) once you’re in your 60s.
You’ll be glad you opened a 401(k) once you’re in your 60s. (Image: Images)

Not a lot of young people who are just finishing up their educations and starting their careers are thinking about retirement. However, when you are in your mid-20s is the perfect time to do just that, since a 401(k) needs time to build up significantly. A 401(k) is a form of investment that you can contribute without paying any upfront taxes. You can't get your money back until retirement age, but with the right combination of money to invest, time and investment strategies, it's possible to retire with much more money than you put in.

Start as early as possible. Try to open your 401(k) by the time you’re 25. The younger you are when you start, the richer you’ll be later on.

Meet with a financial adviser. Your bank or other financial institution should give you access to an adviser who will help you open your 401(k) and learn the best ways to invest the money you put into it.

Set a strategy with your financial adviser. Unless you research the market yourself, it is best to trust their knowledge. However, you can set the strategy, such as adding to a 401(k) that gets invested in a small number of companies, or a safer bet like mutual funds.

Add as much money to the 401(k) as you can to start out with. Remember that adding more now will mean more riches later on.

Discuss 401(k) options with your employer. Some companies have employee incentives where they add a certain amount of money to your 401(k) whenever you do. There is even a possibly that they may match the amount you invest.

Continue to add a certain amount to your 401(k) each year. If you can afford to deposit a certain amount of money each month, this is a good system to get in the habit of using. Otherwise, try to put in a few thousand dollars each year.

Fill out and send in Form 550 every tax season to ensure that the government can keep track of your 401(k) earnings.

Tips & Warnings

  • Don't take money out of your 401(k) unless absolutely necessary, since you will have to pay it back in the form of a loan.

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