Make Retirement A Reason To Celebrate

As you punch the clock on your final workday and step into the grand party called retirement, you deserve more than just cake and coffee. You deserve an epic celebration worthy of all you’ve accomplished. 

With the “It’s Party Time” issue shining a spotlight on the small businesses that make magic happen—caterers, entertainers, décor specialists, event planners—now is the perfect moment to talk money. After all, financial security is the ultimate VIP pass to a stellar retirement.

Becoming a 401(k) millionaire can be a realistic goal with smart financial planning, dedication, and time. Whether you’re just starting your career or almost ready to get the retirement party started, there are actionable steps you can take today to help create a comfortable, financially secure future. Here’s how you can set yourself up for success:

1. Start Your Party Planning Early to Harness the Power of Compounding Interest

Just like booking your venue and entertainment for a big event, early is better. Thanks to the power of compounding interest, even small contributions can grow significantly over time. Consider this example: Two individuals have retirement goals that are 35 years away. 

Person 1 decides to put $25 a week into a 401(k), continues this process for 10 years, and then stops completely. Person 2 starts when Person 1 stops and puts $25 dollars a week in for the next 25 years. Assuming an average 7% compounding investment return over the 35-year period, Person 2 never catches up. Even though Person 1 only contributed $13,000 in capital and Person 2 put in $32,500, Person 1 ends up with $100,831, compared to Person 2 having $85,046.

2. Max Out Your Contributions

In the world of 401(k)s, “maxing out” is like opting for the deluxe open bar package: it accelerates the fun. The IRS lets you contribute up to $23,000 a year (plus an extra $7,500 catch up once you’re 50+). Contribute the maximum amount as soon as you can; it’s the ultimate party favor you can give to your future self. And while you’re at it, reach out to small business financial advisors who specialize in retirement planning. They’re your personal party planners for dollars and cents.

3. Leverage Employer Matches

Many employers match a percentage of your 401(k) contributions, which is essentially free money—think of it as complimentary champagne poured in by your company. Always aim to contribute at least the amount that triggers the full match. Failing to contribute enough to nab the full match is like leaving unopened bottles on the table. 

4. Invest Wisely

Just as a great party features a variety of food, music, and activities, your 401(k) should offer a balanced menu of investments, including stocks, bonds, and mutual funds. Younger savers can lean into more growth oriented funds, while those closer to retirement may want a bit more stability.

5. Increase Contributions with Salary Increases

Whether it’s black tie formal or casual chill, we know to match the vibe of an event. The same applies to our 401(k) contributions. Don’t take the set-it-and-forget-it approach and keep contributions the same. If you get a raise, increase your contributions so your retirement savings will keep pace with your lifestyle. 

6. Avoid Early Withdrawals

Taking money out of your 401(k) before retirement is akin to clearing out all the appetizers while guests are still partying—and it carries penalties. Keep your funds locked in for the main event and let that nest egg fully flourish.

7. Take Advantage of Catch-Up Contributions

Once you hit age 50, the IRS allows you to make catch-up contributions to your 401(k). It’s like having a VIP party pass for special access. Starting in 2024, that VIP pass meant you could add up to $7,500 on top of the standard contribution limit. These additional savings can help you hit the $1 million mark even if you started saving later in life.

8. Don’t Miss the Party

Many small business owners get so busy making magic for their clients that they forget to plan their own financial future. But with the right retirement plan, you can build your nest egg and offer great benefits to your team.

Two popular options are:

• SEP IRA (Simplified Employee Pension):

A great fit for solo entrepreneurs or small businesses with a few employees. A SEP IRA is easy to set up and lets employers contribute up to 25% of an employee’s salary (up to a cap). Contributions are tax-deductible, and the plan is flexible from year to year, depending on how your business performs.

• SIMPLE IRA (Savings Incentive Match Plan for Employees):

Great for businesses with 100 or fewer employees. A SIMPLE IRA requires minimal paperwork and lets employees and employers both contribute. As the business owner, you must either match employee contributions dollar-for-dollar up to 3% of salary or contribute a flat 2% for every eligible employee—an amazing perk that can help you attract and retain talented staff.

9. The Guestlist is Important 

Don’t forget to invite a financial planning professional. A trusted financial advisor helps you:

Choose the right investment mix

Plan for healthcare costs

Understand tax implications

trategize drawdowns so your money lasts as long as the party

If you’re a small business owner yourself, they can help you craft retirement plans for your team too, making sure everyone has a reason to celebrate down the road.

Retirement Plan Consulting and Trust services provided by Arvest Bank. Retirement Plan Advisors and Relationship Managers are registered representatives and investment advisor representatives with Arvest Investments, Inc. member FINRA/SIPC, an SEC registered investment advisor, and subsidiary of Arvest Bank. Insurance products made available through Arvest Insurance, Inc., which is registered as an insurance agency. Insurance products are marketed through Arvest Insurance, Inc., but are underwritten by unaffiliated insurance companies. Arvest and its associates do not provide tax or legal advice. Investments and Insurance Products: Not a Deposit | Not Guaranteed by the Bank or its Affiliates | Not FDIC Insured | Not Insured by Any Federal Government Agency | May Go Down in Value