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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About the Podcast

FI Minded - Financial Independence, Early Retirement & Lifestyle Design
Achieve Financial Independence & Have Fun Doing It
Pursuing financial independence, financial freedom, or early retirement often leads to the same questions: How do I become financially independent? How much should I save? What happens after I reach FI?

FI Minded helps you use money to create more freedom, without turning your entire life into a financial optimization project.

Host Justin Peters explores the decisions behind building a flexible, work-optional life, from reaching financial independence and navigating Coast FI and Slow FI to spending your money, changing careers, stepping away from work, and figuring out what comes after FI.

Each episode combines practical personal finance with conversations about early retirement, lifestyle design, work, spending, healthcare, self-employment, and life after financial independence. The goal isn't simply to reach FI as quickly as possible. It's to make progress toward financial freedom while actually enjoying your life along the way.

On FI Minded, you'll learn how to:
- Reach financial independence without burning out
- Build a flexible, work-optional lifestyle
- Navigate Coast FI, Slow FI, and other paths to FI
- Make smarter decisions about spending and saving
- Prepare financially and emotionally for early retirement
- Figure out what life can look like after financial independence
- Think through the tradeoffs behind major money and lifestyle decisions
- Make progress toward financial independence while actually living your life.

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), Rachael Camp (Work Optional), Jillian Johnsrud (Retire Often), Sean Mullaney (FI Tax Guy), Jill Sirianni (Frugal Friends), Jackie Cummings-Koski (Catching Up to FI), Joel Larsgaard (How to Money), Cody Garrett (Measure Twice), Jesse Cramer (Personal Finance for Long-Term Investors), Jess (The Fioneers), Chris Hutchins (All The Hacks), Diania Merriam (EconoMe), Andy Hill (Marriage Kids Money), Fritz Gilbert (Retirement Manifesto), Maggie Tucker (Inside Out Money), Cody Berman (The Financial Independence Show), Joe Saul-Sehy (Stacking Benjamins), Doug Cunnington (Mile High FI), and and others helping you rethink how to approach financial independence.
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