4 Errors Killing Your 401(k) And Retirement Goals

ThinkstockPhotos-183436662-647016-editedThe 401(k) is one of the greatest vehicles for investing in your retirement. According to a 2015 ICI Research Report, 27% of the average American’s wealth is made up of 401(k) and other defined contribution plan assets. Despite the 401(k)’s potentially great benefits, however, too many Americans fail to make the most of its value and maximize their future net worth. Are you:

  • Enrolled in a 401(k) plan?
  • Contributing enough to your plan?
  • Regularly monitoring your 401(k) portfolio?
  • Apprised of your plan options and seeking advice from a professional?

If you answered “no” to any of these questions, you’re leaving a substantial amount of money on the table.


4 Tips To Maximize The Great Benefits Of Your 401(k) Plan

Considering the errors Americans make that are killing the potential of their retirement plans, you should address each one head on. The following tips speak to each mistake and offer ways to better manage your 401(k) plan.

Tip #1 – Sign up!
The simplest and most obvious step toward maximizing your retirement savings is to take advantage of a 401(k) plan if it’s being offered to you. Many companies make a complete match of your plan contributions, up to a certain percentage. 

In this common scenario, your employer’s match equates to an immediate 100% return on your investment.
Tip #2 – Contribute a minimum of your employers’ match amount.
If you’re offered a free, significant return on your investment, why would you even consider letting such an opportunity pass you by? Many Americans are too focused on the short term, to the detriment of their financial futures.

According to a WorldatWork and American Benefits Institute report from March 2013, only 66% of surveyed businesses reported that the majority of their employees are taking full advantage of their employer’s match benefit. Additionally, only 9% of respondents reported that more than 90% of their employees were taking full advantage.
Tip #3 – Track your 401(k) portfolio.
After enrolling in your 401(k) plan and selecting your asset allocation, you can’t forget about your investment. Markets and investment performance change over time, and so does your life. With different economic environments and different personal needs, you need to track your portfolio and ensure that it aligns with your goals and needs.
Tip #4 – Take advantage of the resources at your disposal.
401(k) providers do offer educational services, so take advantage of them. A good provider essentially gives free investment advice. Larger partners tend to offer brochures, emails or online tools, while smaller companies often provide educational seminars that help you select a plan option directly.

According to the survey data from WorldatWork and American Benefits Institute, 53% of employers provide investment advice services to their employees. Turning down more free benefits is a disservice to yourself.

Life presents few opportunities to reap something for free, especially in the financial world. For something as critical as your 401(k), you must make the most of every benefit that your company offers you.

Learn the keys to smart retirement and college planning, and gain control of your investments.

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