Hot Tips For Retirement Savings

Hot tips on your retirement savings

 At the start, safety features were not needed in car design.
Neither was it needed in a 401(k) account, but that is no longer
true. 

Here are some suggestions and things to watch out for:

1. Save automatically

Twenty five percent of eligible workers do not or decline to
sign up for a 401(k) plan. Workers who do not sign up are
risking their future. Plus, approximately $30 billion are left
out in the form of company contributions. 

If only a few rank-and-file workers participate, the higher-paid
workers contributions are limited as stated in the IRS rules. An
increasing number of companies have made 401(k) enrollment
automatic. Employees can still choose to opt out.

Twenty five percent of large companies have employees
automatically enrolled in the 401(k). Although, this would mean
that many of the new employees are in a very conservative
investment that may not be enough to beat inflation.

If you're one of those higher-paid employees, you may want to
move your money into a stock fund to take advantage of long term
growth. You may also want too boost your contributions each year
until you max out.

2. Simplify your investment

During the late 90s when the stock market was rising, providing
workers with more investment choices was the rage. A few
companies introduced new options and some offered 'brokerage
windows' letting employees invest their 401(k) savings in an
array of funds and stocks.

True-blue investors loved the choices and unfortunately drove up
costs with the increased amount of trading. Majority of the
workers didn't make any choice at all.

If you don't want to mess up your 401(k), simply tell your
company to add a life-cycle or a target-maturity fund. You can
also invest your savings in a balanced-fund option. A 60% stock
to 40% fixed-income ratio is still a good choice. 

3. Seek a low-cost alternative

Anomalies on mutual funds and awareness of high, hidden fees are
making a few employers explore other forms of savings beside
mutual funds. A commingled fund is an option that is available
wherein the service provider combines small employer
contributions to reduce costs.

The problem with commingled funds is that it isn't publicly
traded and investors usually have less information about how the
money is invested. When your plan is offering mutual fund
alternatives, make sure to compare costing for long and short
term plans