TV's best financial advice
‘30 Rock’ talks 401(k) accounts
The show: 30 Rock
The situation: In a staff meeting, Jack Donaghy announces that Liz Lemon won the GE Followship Award for being the employee who best exemplifies a follower. The award comes with a $10,000 check.
Donaghy later asks, "So, what are you going to do with your money? Put it into a 401(k)?"
Lemon: "Yeah, I gotta get one of those."
Donaghy: "What?!? Where do you invest your money, Lemon?"
The problem: Lemon admits that, although she's stashed cash in her checking account, she hasn’t started a retirement fund.
The lesson: Funding a retirement account is important. There are tax benefits, but a retirement account also comes with peace of mind.
"You can’t bank on government benefits to pay your way through retirement," says personal finance author Gail Vaz Oxlade.
The maximum contributions are $17,500 for a 401(k) and $5,500 for an IRA, but most people are saving far less. A report released by the Employee Benefits Research Institute found that 30% of workers had less than $1,000 in their retirement accounts.
Waiting to invest can have serious financial implications as well. If Lemon started contributing $150 per month to a 401(k) when she was 25, with a rate of return of 10%, her account would top out at $876,000 at retirement; by waiting until she’s 45 to start contributing the same amount, her 401k will have just $113,000 when she turns 65.