401k Investment for your Retirement

 

For many people, the subject of saving for retirement has become more serious as we now have aging population and there seems to be a potential social security system in the near future. During our golden years, we would need to survive by acquiring the nest egg as early as possible. There are a few avenues such as Mutual funds, IRA's and 401k options which we could use for preparation of our future.

Out of all, 401k becomes the most popular choice. The main reason why 401k is popular is that many employers not only offer the option at work, they also match a certain percentage of your own contribution out of your salary. It varies that how much the employers will match, but usually it ranges from 25% to 100%. However, the number of employers that do not match at all is on the rise, unfortunately. Another outstanding benefit via 401k is that the amount you contributed as en employee will be made with pre tax monies.

Also the 401k plan is very flexible that gives you choices regarding your overall investment strategy. There are some proven methods for investing in 401k that will depend upon one's age at any given time. For example, whether the employer matches or not, if a young individual invest in 401k he/she will have plenty of time on his/her side. That person can invest more aggressively if feels comfortable because the younger the investor is, the more time is available to ride out fluctuations in the stock market. The market will always have ups and downs over a period of times. As the investor gets near retirement age, it would be prudent to switch the strategy to more conservative way, thus making investment much safer while sill more profitable than a traditional savings account.

 

Previously only few larger companies were offering employees a 401k plan for their retirement, and it was not an option for the self employed individuals. Luckily, this is not the case in today's market place. Now there is a plan called Solo 401k or Individual 401k which allows business owners with no employees, but with only partners or a spouse.. They can set up a retirement plan that is similar to traditional 401k offered by any larger companies.



Are you thinking of quit your job and leave the work place, but you have 401k plan with your current employer? You don't need to leave your own retirement investment in their hands after resignation. You have an option of rolling over your own 401k plan, and you better take advantage of this option. By doing this rollover, you can still keep control over your investment that you have been putting your time and effort. When it happens, the money that is in 401k account will be rolled all together into another approved investment account. There are programs called a Simple IRA, a SEP IRA account as well as another 401(k) accounts. But it is always the best practice to consult a financial advisor or specialist who can help you understand what the best option and opportunity for you as an individual.

 

Always keep in mind that you never take out money out of your 401k account either all or in part, because there will be a 10% penalty on the portion that is withdrawn if the withdrawal happens before you reach the age of 59 and half. When you decide to execute a rollover option to deal with accrued 401k investment, it should be done as one transaction so that you can avoid any of such penalties or fees.



401k investment


If you are thinking of investing for your retirement, you need to ask your employer on how much you are allowed to contribute and what they can do to match what you have contributed. And then speak with financial advisor regarding next steps to take. It is always safe to get a professional advice before you move on.

 

 

This website is not affiliated with any local 401k investment office or legal department.

For questions regarding your 401k investment please contact your local financial advisor.

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