
18. Never Let Go of the Employer-Backed 401(k)
Taking a cue from the above advice, you should focus on depositing as much money as possible in a retirement account. Towards that end, you should start putting money there as early as possible. So it follows that you should not let go of an employer-backed superannuation plan such as SIMPLE IRA, SEP, or 401(k) if the opportunity comes your way.
By and large, employers contribute the same amount that is automatically deducted from your salary and credited to your 401(k). Hence the amount the employer is contributing is free money, technically speaking, that’ll fetch you a 50% or even 100% return. Additionally, the retirement account gives you the leeway to deposit your before-tax money, so whatever you put in gets compounded in the long run. You can eventually access a large chunk of funds when you retire, but your withdrawals will be subject to taxation.

To compensate for what you lose in taxes concerning a 401(k), you can go for a Roth IRA. You can open a Roth IRA at any stage of your life (even postretirement), provided you are still earning taxable money. Depositing money in both employer-sponsored 401(k) and Roth IRA facilitates making good savings in tax-deductible retirement plans as stipulated by the law.
Ensure that you’re contributing sufficiently to your 401(k) account before putting money in a Roth to make the most of your employer’s contributions. To maximize your nest egg, have a fair idea of the gifts you can make for both the plans (Roth IRA and 401{k}) as per your age.