"This workplace account allows you to make pre-tax contributions to a retirement plan and, in many cases, your contributions also entitle you to receive matching funds from your employer. However, while most people know they should contribute to a 401(k), they aren't necessarily certain about what to do next. If you have a maxed-out account at work and you're trying to figure out what else to do with your money, here are some options to consider."
"If you don't already have an emergency fund in a high-yield savings account, that should be your top priority after making 401(k) contributions. Your emergency fund should typically contain a minimum of three to six months of living expenses although you may want to put even more aside for emergencies if you are the sole breadwinner in your household, if your job isn't very stable, or if you have concerns about your health."
Maxing out a 401(k) builds retirement wealth through pre-tax contributions and potential employer matching. After maximizing contributions, the top priority should be a fully funded emergency fund held in a high-yield savings account, typically three to six months of living expenses or more for those with unstable income or health concerns. Next, prioritize paying off high-interest debt such as credit cards, medical bills, or personal loans because eliminating such debt provides a guaranteed return by avoiding costly interest. Lower-interest, long-term debts like student loans may be deprioritized in favor of investments or other goals. Emergency preparedness prevents early 401(k) withdrawals for unexpected expenses.
Read at 24/7 Wall St.
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