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A few reasons to celebrate this 401k DayPosted by Retirement on: 2005-09-20 08:16:39 in category:
401(k) [ Print | Permalink / 0 Comment(s) ] It's hard to believe, but the 401k plan as we know it first appeared in 1981. Yet it seems like it's been around for much longer with the importance it has on our financial life. More and more Americans depend on their 401k for the most of their retirement savings than ever before. This uniquely American retirement plan gives you the independence to create your own game plan and decide your own investment options. And, since we all are likely to change jobs several times throughout our career, it's great to know how portable your contributions are when you change jobs. I mention all this because Tuesday is National 401k Day. It's a holiday that most of us haven't heard of. Even if your employer isn't planning any festivities to celebrate it, you can observe the day yourself. First, if you haven't opened a 401k yet, why not take the day to do so? It's a painless and easy way to save for your retirement. All you have to do is fill out the paperwork once, and your contributions are made automatically. The money comes out of your pre-tax earnings. Plus, your contributions reduce your level of taxable income. So you might have less to owe Uncle Sam next April 15. If your budget is tight, or you're nervous about investing, start small. Chances are that a 1 or 2 percent contribution of every paycheck is money you're not even going to miss. But it certainly will be money you look forward to as it grows and your retirement date gets closer! Consider the time value of money. The sooner you put it toward your retirement, the more it grows. If you put $1,000 into a 401k plan, at a hypothetical 6-percent return, compounded annually, you would have $5,743 after 30 years -- just for putting money away. If you were able to put more aside, this amount would really be the start of a healthy retirement nest egg. If your employer matches your contributions, you have even more of a reason to participate. That's free money you're getting, simply to invest! It's like getting a bonus every paycheck. Don't let that opportunity get away! You don't have to be a Wall Street wizard to have a 401k. Your employer has pre-selected a number of investment options to appeal to a broad range of employees. Often, these may be grouped in portfolios based on the risk level an employee is comfortable with, so you can opt simply for one pre-set portfolio. Read all the explanatory material about your options carefully. Attend any enrollment meeting at your company and ask questions. If you've done all of the above, you certainly can pat yourself on the back. But don't think that entitles you to take 401k Day off! Now's a perfect time to take a look at the progress you've made. Check to see if your investments are still appropriate. If you haven't looked at your allocations since you opened your 401k, make sure they still match your goals and current circumstances. If your portfolio doesn't appropriately reflect you, then perhaps you should make some changes. Do you need to rebalance your account? When you first set up your contribution, you assigned percentages of that contribution to specific types of investments. These were probably based on your age, time span to retirement, and how comfortable you were with certain types of investment risk. Homepage Please support are sponsors. To design you custom retirement plan. http://www.retirement-plan.us For planing a IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management: National ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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