Building Toward Retirement | Coulee Bank

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Building Toward Retirement

Retirement planning can feel overwhelming, but small, consistent steps can make a meaningful difference over time. Understanding how a 401(k) works, taking advantage of any employer match available to you, and reviewing your contributions regularly can help you build a stronger foundation for your future.


What’s the 411 on a 401(k)?


A 401(k) is a retirement savings plan offered through your employer. Amy Bauer, Chief Human Resources Officer at Coulee Bank, explains, “Many employers contribute money to an employee’s 401(k) plan as an additional benefit, either as a 401(k) match or a profit-sharing contribution. Each employer plan is generally set up differently, but most provide an employer match.” For example, Coulee Bank offers its employees a dollar-for-dollar match up to 4%. This benefit can help employees build a stronger financial foundation for retirement.


In a traditional 401(k), contributions are generally deducted before federal taxes are calculated, helping to reduce your taxable income. Those contributions and any earnings are generally taxed when you withdraw them in retirement. Bauer notes that some employers offer a Roth 401(k) option. With this plan, your contributions are deducted from your paycheck after taxes have been withheld. You don’t receive an upfront tax break, but qualified withdrawals in retirement are generally tax-free. For more information about the difference between Roth and Traditional 401(k)s, refer to this article.


Be Patient and Watch Your Wealth Grow


Bauer says, “Employer contributions can give your retirement savings an extra boost.” When an employer offers a 401(k) match, it contributes money to your retirement account based on how much you contribute, up to the plan’s limits. For example, if your employer matches contributions dollar-for-dollar up to 4% of your pay, as Coulee Bank does, contributing 4% means your employer adds another 4%, bringing the total contribution to 8% of your pay.

Over time, both your contributions and your employer’s contributions can earn investment returns and benefit from compound growth. While retirement savings goals vary by individual, contributing 4% of your own pay and receiving a 4% employer match puts you more than halfway toward the commonly cited 15% annual savings guideline.


Examine Your Deferral Amount


Bauer recommends reviewing your investments after major changes, such as a salary increase, and at least once a year to ensure you are aligned with your financial goals. Even a small increase, such as automatically increasing your contribution by 1% each year, can add up. It’s also a good opportunity to make sure you’re contributing enough to take full advantage of any employer match available to you. As your budget allows, gradually increasing your contribution can help you work toward your long-term retirement savings goals.


Support Your Future Today


One small step you can take this month is to review your 401(k) account and make sure your beneficiary information is up to date. Your beneficiary designation determines who will receive your retirement savings if something unexpected happens to you.


Keeping this information current, especially after major life events such as marriage, divorce, the birth of a child, or the loss of a loved one, can help ensure your wishes are carried out and make it easier for your family and loved ones to navigate financial matters during an already difficult time.


Bauer also recommends reviewing your contribution rate. “Reach out to your Human Resources department or plan administrator. Ask questions and learn how your employer’s matching contribution works. If a match is available, consider whether you’re contributing enough to receive the full amount available to you. An employer match is an important part of your overall benefits and can add dollars to your retirement savings,” she explains.


If you have a retirement account from a previous employer, review the fees, investment options, and account requirements before deciding what to do with the funds. Depending on your circumstances and the rules of each plan, you may be able to leave the funds where they are, roll them into your current employer’s 401(k), or roll them into an IRA. Each option has different considerations, so be sure to understand them before making a decision.


Retirement planning does not have to be an all-or-nothing effort. Understanding your 401(k), receiving the full employer match when possible, and making periodic updates as your life and income change can help you take meaningful steps toward the retirement future you envision.


The information provided is for informational purposes only and is not financial, tax, or legal advice. Please consult a qualified financial, tax, or legal professional regarding your individual circumstances.