Paul Haarman

Living your golden years in style does not happen just like that. You need to work towards it to live your retirement days comfortably, worry-free. Paul Haarman believes the most essential thing to do is start saving early while you’re employed. Your employer’s retirement program could be one of the perfect ways to help you build a secure financial future, more so if you’re a new investor. Then, most employees hesitate to keep aside a small sum every month from their paycheck because they feel that will affect their current finances.

According to an article published on, a 401(k) retirement plan is one in which employees determine what amount to contribute to this plan. Here are the top benefits of a 401(k) plan:

More time to grow your savings

Paul Haarman says when start saving early, you will have more time to grow your money. The greatest benefit of a 401(k) plan is its compound interest, an interest you earn on the principal sum of the investment as well as any build-up interest. It means you earn interest on your interest.

Compound interest has a significant effect on your long-term investment and a powerful tool as far as your retirement savings are concerned. It might not seem that important looking at this retirement plan in the initial days, but the compound interest will make you rich in the long-term.

Tax benefits

When you contribute to a 401(k) plan, it’s taken right out of your salary before federal taxes are pending. Since the contributions mean pre-tax, it reduces your total taxable earning implying you will owe less when it comes to your income tax, no matter whether you choose the standard deduction or itemize. You can even fall into a lower tax group.

The pre-tax contributions are tax-delayed until the time you decide to draw out money when you retire. In other words, in retirement, you will come under a lesser tax bracket compared to a situation if were to pay tax on your contribution now.

Change of jobs does not affect the 401(k)

No matter if you are in a different job from the previous one, your contribution to 401(k) and the earnings will stay with you. Based on the type of your plan, several ways ensure your retirement plan remains invested and keep growing on a tax-deferred basis.

When you have left your previous company and yet have an old 401(k) with that employer, figure out what choices you have for leaving it in the plan or moving the same elsewhere.

Flexibility in contribution

You have the liberty to contribute the maximum amount or as little to your 401(k) plan, depending on what you like. It depends on the plan as well as IRS limits. Additionally, you enjoy the flexibility to change the contribution amount subject to plan limits, any time you like, depending on your condition. If you want to learn more about changing contributions, take some time to read on 401(k) retirement plans.


If you want to live comfortably in your golden years, plan, budget, and make the best use of your 401(k) plan. It makes saving an easy and unproblematic process.