Episode 113

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Published on:

28th Aug 2023

4 Steps to Setting Up Your 401(k) Account at Work | E113

Starting a new job always comes with a hectic first week of paperwork. More than likely, one of the documents is about investing in your company’s 401(k) program.

If you grew up in a household like mine, the importance of investing in your 401(k) account was hammered into you but let’s say you didn’t set up your 401(k) account right away.


Maybe the thought of investing for your future seemed like a pipe dream when student loans, car payments, and buying furniture that isn’t Grandma’s hand-me-down was looming in your mind. Or the process and decisions of setting up a 401(k) account felt intimidating and overwhelming to you.


The first point is trickier. Money is typically pretty tight in our 20s as we are building our earning power. I totally understand why prioritizing our current needs seems to be more important than our future needs. But hopefully, through this conversation, I can convince you that even starting with a small amount can go a long way.


The second point though, being intimidated by the setup process, is something I can help with. This is definitely a topic that should be taught in school, but now having gone through this multiple times, I can assure you that setting up a 401(k) account is an easier process than you think.


In today’s episode, I am going to walk through 4 steps to setting up your 401(k) account, discuss decisions you are going to have to make, and share some guidance along the way.


Key Takeaways:

  • Why 401(k) accounts were established by Congress
  • How to initiate the setup process
  • The difference between a Traditional and Roth 401(k)
  • How to choose which account is best for your situation
  • How to calculate your employer match
  • 2023 401(k) employee contribution limits
  • How to decide how much to contribute to your 401(k)
  • How to choose an investment option that is right for you
  • How much should I be paying in investment fees
  • How to automate investing using target-date index funds


Mentions:

How to Get Started Investing, the Cost of Actively Managed Funds, and a 2-Step Plan to Retire in 15 Years | E57 Jeremy Schneider - https://tsirpodcast.com/57

Hidden Cost of Investing: 3 Common Fees and How to Stop Paying Them | E94 - https://tsirpodcast.com/94


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FI Minded: Achieve Financial Independence & Have Fun Doing It
Achieve Financial Independence & Have Fun Doing It
Want to achieve financial independence without missing out on the fun?

FI Minded is for anyone who wants to achieve financial freedom, live life on their own terms, and, most importantly, enjoy the journey along the way!

Whether you’re just starting to think about financial independence or already deep into the process, FI Minded gives you the tools and inspiration to make FI a reality - without giving up the things you love.

Each episode, we’ll cover topics like:
*Financial Independence Strategies: Simple, actionable advice to reach FI faster (if that’s your goal).
*Work Optionality: Transitioning from the corporate grind (no more "one more year syndrome") to a life of freedom and flexibility.
*Lifestyle Design: How to build a life that aligns with your values, goals, and dreams.
*Stories from the FI Community: Real people sharing their journeys to FI and what they’ve learned.
*Fun with FI: How to save your future and enjoy your current life through CoastFI, mini-retirements, travel, or just making the most of your time.
*Fighting Burnout: Balancing saving for your future while staying mentally healthy.

Some of our past guests include:
Carl Jensen (1500 Days), Jeremy Schneider (Personal Finance Club), Nick Loper (Side Hustle Show), Andrew Giancola (The Personal Finance Podcast), Jordan Grumet (Earn & Invest), Jill Sirianni (Frugal Friends), Jacking Cummings-Koski (Catching Up to FI), Jesse Cramer (Personal Finance for Long-Term Investors), Diania Merriam (Optimal Finance Daily), Rachael Camp (Work Optional), Jillian Johnsrud (Retire Often), Sean Mullaney (FI Tax Guy), Joel Larsgaard (How to Money), Erin Lowry (Broke Millennial).
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