Understanding how a 401(k) works is crucial for Americans as it plays a vital role in retirement preparation by allowing funds to grow through investments.
Employer matching is an attractive feature of a 401(k), often matching dollar-for-dollar on employee contributions up to 6%, effectively increasing retirement savings.
In 2024, the contribution limit for employees is set at $23,000, with an additional $7,500 for those aged 50 and older, allowing significant savings.
Beginning 401(k) contributions should occur immediately to maximize retirement benefits, as the earlier you start saving, the more your investments can grow.
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