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Category

😹
Fun
Transcript
00:00Hey, look at you! You just signed up to contribute to your company's 401k. Way to go!
00:05But what's really good about it anyway? And is it always a no-brainer to contribute?
00:10In general, the government wants to incentivize you to save for your future self so they won't be on the hook.
00:16The 401k was created in the late 70s and it allows both employers and employees to save and invest for their retirement.
00:23In return, the depositors will receive a tax benefit.
00:26So let's say you made $50k this year. Well, normally you'd have to pay tax on that.
00:31But if you contributed $5k to your 401k, that $50k would reduce to $45k.
00:38Aka, you owe less to Uncle Sam.
00:41Not only that, but many employers offer a matching benefit on top.
00:45It's kind of like free money. Except, of course, there is a major catch.
00:49You can't take it out of this thing until you're 59.5 without some major penalties.
00:53Think like 30% of your balance. Poof! Gone.
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