Now, more than ever, the workplace is in constant change. The level of education and direction regarding what is for most people the largest portion of their retirement, your 401k or 403b, is solely put on your shoulders. With little direction, you may only have an 800 number or website to give you some assistance to help you decide the best direction for your future. We believe that education is key for everyone who is trying to save for retirement and has a goal to strive for.
- Take advantage of an employer match.
This is free money that doubles in your 401k, making your account grow quickly. Money grows in two ways except for in a company retirement plan where they also contribute to your account.
- See if there is a Roth option available.
Tax-free growth in a retirement plan gives you another way to plan for the distribution of your retirement funds that can make it last longer. The company match will go into the pre-tax portion of your account.
- Work with a Financial Advisor to select investment options that complement your portfolio.
Use a financial advisor for education on how to maximize the use and growth of your money. Planning for retirement is no different than planning a trip. Know how you are going to get there with the best direction possible.
- Put it on a shelf and forget about it until you are 65.
You should plan to look at your 401k plan at least once a year. See how it’s doing and make adjustments if needed, like rebalancing your allocations or changing your contribution amount.
- Max out your contributions.
Don’t get us wrong, if you can contribute the max that is great. However, don’t contribute the max at the expense of other saving and investing strategies. In many cases contributing more than is needed to get the company match can limit your options and financial flexibility outside of your work plan. There may be other options with the extra money you are putting in your 401k that may improve your savings and retirement (such as non-qualified investment accounts or paying off debt sooner).
- Assume all retirement plans are the same.
There are many different ways that companies let you invest. There are fund options, matches, vesting schedules, and ways to move your money out of the plan while you are still employed with that company or when you leave their employment whether it’s for another job or retirement.
In recent decades it has become more common for people to change jobs, whether it was a conscious decision, layoff, or buyout from your current employer. You do not have to leave your 401k with your old employer or move it to your new employer. Even if your company is bought out and your job doesn’t change, chances are the new owner will change retirement plans. This is the perfect time to begin working with a qualified Financial Advisor to better understand your options. Many times you can improve the options and opportunity of your 401k when moving outside of the company’s plan. Most importantly, you are in control and can benefit from open architecture to put together solid investment allocations that fit your goals and objectives.
Let us help you determine your options and put together a plan that fits your goals and objectives.
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This commentary on this website reflects the personal opinions, viewpoints and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Written by: Steve Wilbourn