Volume 16: The Lockshield Letter
Mar 31, 2026
Episode 15: Starting a 401k
Getting Started with a 401(k)
Episode Description
In this episode of the LSP Podcast, we dive into the fundamentals of a 401(k) and why it’s one of the most powerful tools for retirement savings. A 401(k) is an employer-sponsored plan designed to make saving easy, often coming with added perks like employer matching contributions. We break down contribution limits for 2025, which is different than the standard limit of $24,500 and the $32,500 catch-up provision for eligible individuals in 2026. We also discuss the option to make Roth contributions within your 401(k), giving you more flexibility in how your retirement savings are taxed.
A key focus of the episode is the recommended order of saving: start by contributing enough to receive your full employer match, then prioritize a Roth IRA, and finally return to your 401(k) to maximize contributions. We also cover the pros and cons of 401(k) plans. On the plus side, they’re simple, automatic, and typically low-cost. However, they can be less flexible compared to other investment options. We explore target date funds—the most common default investment—highlighting their “set it and forget it” convenience, along with potential drawbacks like higher costs and overly conservative allocations.
Finally, we explain what happens when you change jobs, including your options to leave your 401(k) with your former employer or roll it into an IRA.
Whether you’re just getting started or looking to optimize your retirement strategy, this episode provides a clear roadmap to making the most of your 401(k).
Recent Podcasts
Tips, advice, and more
Episode 15: Starting a 401k
Getting Started with a 401(k)
Episode 14: Savings Rate
How Much Should You Save
Episode 13: Distribution Rate
Understanding Distribution Rates
Episode 12: Survivor's Benefits
Survivor Benefits Explained