Though retirement might seem ages away, as soon as you have the opportunity to invest in a 401(k), do it, regardless of how much money you’re making. “There are two powerful wealth builders in a 401(k),” Krawchek says. First off, its tax benefits; your money can build in a tax-deferred way. “The second is, if your company has a match, that is free money … if you put in 10, and they put in 10, you have a 100% return immediately. And then the value grows off of double what you can afford to put in.” If your company matches half of what you put in, you get a 50% return, and so forth.
A good rule of thumb, advises Krawcheck, is putting 10% into your 401(k), and then, aligning with the 50-30-20 rule, putting that other 10% for “future you” into savings or investments. And as you get older, you might want to consider switching those percentages around and investing more in your 401(k) and putting less in your savings — after, for instance, you’ve already bought the property you were saving up for all those years.