The Four BIG 401K Mistakes
The number one way most Americans save for retirement is through their 401K. The process enables a few dollars out of every pay check to go toward their retirement future, grow tax deferred and have the ability to receive matching contributions from their employer.
These plans come with a few downsides... undisclosed fees, minimal or poor investment options and limited access (until one retires or becomes 59.5 years of age). Because of these downsides, the following four mistakes can be avoided:
1) Not Getting Full Match - know your plan and contribute just enough to receive your employers full match. Example contributing 6% to receive your employers 3%.
2) Contributions Beyond Match - additional retirement dollars should be invested in a ROTH IRA, as it grows tax FREE, comes out tax FREE and you can access prior to 59.5 years of age without taxes or penalty.
3) Taking Loans - 401K Loans may trigger an unintended tax issue and reduce your nest egg’s potential future size. Conventional bank / credit-union loans are much more effective to raise cash when needed.
4) Not Adjusting - the 401K’s portfolio should be regularly adjusted to the changing economy and stock market conditions for optimal performance.
By avoiding these four mistakes with your 401K, your retirement nest egg can grow to it’s true potential. If you, your family members or friends need assistance in optimizing their 401K performance, simply call our office for assistance.
Best Wishes... Mark Herhold