Will your employer match your contributions up to a certain amount? In many plans this number is about 3%. If this is the case I absolutely recommend doing whatever you can to contribute at least this amount. For reference, if your salary is $50,000/year and your employer will match 3% dollar-for-dollar, then you would contribute $1,500 each year and your employer would giveyou another $1,500. This immediate 100% return on your investment is the best deal in retirement planning. However, if your employer does not match, then I still recommend contributing at least something. Your ability to be financially independent will hinge greatly on your ability to save and a 1% savings rate will need to increase substantially in order for this to happen. If your checks every other week were $1,000, remember that 1% is only $10. The foundation of investing is based on deferred gratification; you'll have to trim your expenses today so that you can invest to be able to fund your retirement. -Adam Harding, CFP(R)
For informational purposes only, not to be considered investment, tax or legal advice.
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