How much should you contribute to your 401k?
Retirement is often one of the things we put off or push to the back of our minds. So how much should I contribute to my 401k? We chat about that on this Queer Money. If you want to reach financial sustainability and financial independence, start here by getting rid of any credit card debt with the free, 7-Step Credit Card Debt Slasher.
What’s the right 401k contribution amount?
What does the data show about LGBT 401k contributions?
According to The Motley Foo / Debt Free Guys LGBTQ+ Money Study, when LGBTQ+ people have access to company-sponsored retirement plans they’re most likely to contribute between 4% to 6%.
Are LGBTQ folks contributing enough?
According to YahooFinance, most Americans contribute an avg of 11.2%, but Vanguard recommends 12-15% and Fidelity recommends 15%.
So, LGBTQ+ people are about halfway there. This is ultimately different for everyone, based on current lifestyle and income and expected lifestyle, investments and income.
But don’t be fooled – many studies show this is as much a spending problem as an income problem. Yes, ask for a raise, look for a better job with better benefits and salary, start a business – all that! But we also recommend getting crystal clear on your spending, where every dollar comes from and every dollar is going. Do a spending analysis for at least 6 months if not 12 to see where your money is going and what small improvements you can make. Then shift the savings into your 401k contributions. When we did this it helped us pay off our debt. When the debt was gone we poured the money we were sending to debt into our retirement accounts. This is what helped us reach the $1,000,000+ mark in our retirement accounts in 2021.