How Much A 401(k) Contribution Is Worth

February 11, 2014
by Michelle Perry Higgins

Start Shopping for Long-Term-Care Insurance at 45What mistakes do people make when planning their approach to taxes?

Hands down, the biggest mistake I see is that most people fail to appreciate the value of a 401(k) plan. If you contribute to your 401(k) with pretax dollars, you will reduce your taxable income, dollar-for-dollar, by the amount of your contribution to the plan.  In 2014, you can save up to $17,500 pretax and if you are over 50 years of age you can make an additional catch-up contribution of $5,500.

The added benefits are that your employer may have a matching contribution and you are saving for retirement! By not maximizing the matching employer contribution, you are literally leaving money on the table that would be better put to use in your golden years.