If you are one of the millions of Americans with access to an employer-sponsored retirement plan – such as a 401(k), 403(b) or Thrift Savings Plan – you may unwittingly be prey to some dangerous temptations. In order to maximize your 401(k) plan and help improve your chances at retirement security, you need to be able to recognize and stand up to them. Download our new guide, 9 401(k) Temptations to Resist which outlines some of the more common 401(k) temptations you may face and tells you how to fight them.
The temptation to procrastinate
Let’s say you just started a new job. You’ve been given a 401(k) enrollment packet, but it’s tempting to put it aside. Whether you’re too busy navigating the ins and outs of your new position, your starting salary doesn’t include enough for “extras” or retirement just seems too far away to be a concern, it’s easy to put off enrolling in your retirement plan.
However, none of these are good reasons to put off saving for retirement. Your long-term financial security needs to be a priority; no matter how appealing it may seem to procrastinate, don’t. You can fight this temptation! Recognizing it is half the battle. Once you realize what you’re doing, it’s time to take action.
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Now, how do you fight the temptation to procrastinate? Don’t wait! Enroll as soon as you become eligible. If money is a deterrent, start with a small contribution amount. Socking away just 1% from each paycheck can make a difference. You’ll be saving more than you’ll miss from your take-home pay, and the power of compounding can turn even small contributions into a sizeable nest egg over time. See just how much your contributions can grow over time in 9 401(k) Temptations to Resist.
The temptation to ignore your 401(k)
You’ve had your 401(k) for years and it’s just running on auto-pilot with the money in your account still sitting in the same funds as when you first went into the plan. In fact, now that you think about it, you can’t remember the last time you reviewed your 401(k) account, let alone made any changes to it. It’s no wonder, because you’re so busy. You work for a great company, though, so you’re sure the plan investments are just fine. No problem!
Actually, there is a problem. It’s tempting to ignore your 401(k) in favor of doing something – perhaps anything – else. But ignoring your account can have a negative impact on your nest egg. And you do not want to realize that when it’s too late to do much about it. Instead, you need to start paying attention to these four key things now:
- Your contribution rate
- Your mix of investments
- Your target allocation
- Your beneficiary designation
Don’t be tempted to “set it and forget it.” Increase your contribution rate a little bit each year (up to annual plan and IRS limits), review your risk tolerance and asset allocation at least annually, rebalance your account regularly and keep your beneficiary designations current.
Want help figuring out how much you need to be saving or what the right mix of investments is to help you achieve your long-term financial goals? Then download our 9 401(k) Temptations to Resist guide. Not only will you learn more about how to keep up with your 401(k) and how to avoid procrastinating, you’ll also discover seven other 401(k) temptations that are lurking out there.
Our guide will reveal all nine of the 401(k) temptations you need to resist, showing you how to recognize them and giving you specific strategies to help you fight them. Arm yourself with this valuable information and be prepared to resist those temptations today!
We’re The Mutual Fund Store®, and we’ve been helping folks like you since 1996. Not only have our investment advisors been providing unbiased, fee-based advice and asset management to more than 50,000 clients in more than 120 offices nationwide1, but we’ve also been creating helpful guides written for people just like you. Because we’re real advisors helping real people. And we know you want information and answers.
Need some actionable strategies in other areas of your life? Check out our other guides:
1As of June 30, 2015
This information is provided by The Mutual Fund Store, and is for informational purposes only. The information is not intended to constitute investment advice or recommendation for any individual. This material should be regarded as educational information. If you have questions regarding your particular situation, please contact your investment, legal or tax advisor.
The Mutual Fund Store® is a nationwide system of registered investment advisers, which include affiliated companies and independently owned and operated franchises. Individual Stores are SEC- or state-registered investment advisers. Each Store can offer investment advisory services to prospective and existing clients in the state where the Store is located, while a number of Stores may also offer advisory services in nearby or other states. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. For the period ending June 30, 2015, The Mutual Fund Store system collectively managed more than $10 billion for more than 38,000 clients and has more than 120 offices nationwide.
Investing in securities, including mutual funds, involves risk including the risk of loss. Past performance is not a guarantee of future results. Diversification does not ensure any investment strategy will be protected from market risk. Investors should consider the investment objectives, risks, and expenses of a fund carefully before investing. Before investing in a mutual fund, request and review the fund’s prospectus or consult with a professional fee-based financial advisor. For information on taxes, please consult a tax advisor.
This content was provided by The Mutual Fund Store. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.
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