Financial Wellness Minute: 401k's

Get smarter about your money with this Financial Wellness Minute. I'm Jackie Formo from the Fergus Falls Office of Mid Minnesota Federal Credit Union. A 401k is a retirement savings plan that helps people save money for their future. Here are the basics.

• When you start a job, your employer may offer a 401k as a benefit. This is a special account where you can contribute a portion of your salary, and sometimes your employer will match a percentage of what you contribute.
• The money you put into your 401k is taken out of your paycheck before taxes are taken out. This means that you won't pay taxes on that money right away, but you will have to pay taxes on it when you withdraw it in the future.
• Over time, the money you contribute can grow through investment earnings.
• You may be wondering, "When can I access the money in my 401k?"  The purpose of a 401k is to save for retirement, so you typically can't withdraw the money until you reach age 59 1/2 without paying penalties, but there are some exceptions.
• The earlier you start saving in a 401K, the more time your money has to grow. Big and small contributions do add up over time.
• Use a 401K as a way to save for your future so that you can enjoy a comfortable retirement.

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