Saving for retirement is one of those tasks that's much easier said than done. With a little financial planning, though, and a basic understanding of tax law, you can put away a sizable nest egg for when you’re no longer earning a regular paycheck. The simplest way to do so will likely be through a 401(k) plan, which is an employer-sponsored investment account. Here, a knowledgeable tax advisor from Sharrard, McGee & Co., PA explains why such plans are so advantageous. 

3 Considerations Everyone Should Know About 401(k) Plans

1. They Are Fairly Conservative 

Funding a 401(k) plan is a relatively safe way to save for retirement. Accountholders have some control over how their money is invested, and the options typically include some combination of bonds, stocks, and money market investments. Most people opt for target-date funds, which are comprised of bonds and stocks that become more conservative as the accountholder nears retirement. 

2. They Provide Some Tax Breaks

Your 401(k) contributions are automatically taken from every paycheck before the IRS gets its cut. That means you can save roughly 20% more simply by investing in a 401(k) plan. Putting $800 in a savings account every month requires $1,000 in pretax earnings; however, putting $800 in a 401(k) plan requires just that (and will lower your taxable income in the process, saving you even more). 

3. They Have Unique Perks 

Most employers offer to match some portion of their employees’ 401(K) contributions. If this is the case for you, you can expect a tax advisor to encourage you to take advantage of the match. Even with other investment vehicles in motion, an employer match is essentially free money, and you should never say no to it. 

If you’re ready to devise a financially savvy retirement savings plan, turn to a tax advisor at Sharrard, McGee & Co., PA. Located in Greensboro and High Point, this firm provides accounting and financial services for both private individuals and commercial clients. For nearly four decades, their dedicated team has been serving those in the Piedmont Triad. Whether you need help with tax planning or saving for retirement, you can rely on a tax advisor from their firm. To learn more, visit their website or call (336) 272-9777 in Greensboro or (336) 884-0410 in High Point to make an appointment today.