Introduction

You’ve likely heard that the 401(k) is one of the best retirement savings tools available to Americans. But it won’t do much good if you don’t know what you’re doing with yours. According to a study from the Employee Benefit Research Institute, people who are actively engaged in their retirement plans save more than those who aren’t and enjoy higher returns for their investments as well. Here’s how to get started:

Has your employer offered a match?

If your company offers a matching contribution, the best way to get the most out of it is to contribute at least enough to get the full match. Your employer wants to give their employees a reason to save for retirement, so they’ll often match up to a certain percentage of your salary. For example, say you make $50,000 per year, and they match half of whatever you put into your 401(k). That means if you contribute $1,000 per month into your 401(k), they’ll add an extra $500 every month–and that’s free money! You can use this extra cash however works best for you: paying down debt or saving up for something fun like travel or buying stuff online (I’ve never been able to negotiate my way around how many times I’ve hit “send” on Amazon Prime 2-day shipping).

Are you contributing enough?

Contributing enough to your 401(k) is the most important part of your retirement plan. And if you’re not contributing enough, now is the time to make a change.

• How much should I contribute?

The answer depends on several factors: how much money you earn and how old you are (see below). But if there’s one thing we know about 401(k)s, it’s that they’re an amazing way for people who work for companies with these plans–or who have self-employed businesses with no other options–to save for retirement without paying taxes on their savings until withdrawal time later in life. That means that even if someone makes just $30,000 per year but contributes 10% toward their 401(k), they’ll still end up with more money than someone making $150,000 who only saves 5%.

• What happens if I don’t contribute enough? If a person doesn’t make any contributions at all into their account during any given year while employed by an employer offering such benefits (or while running their own business), then those funds could be taxed as ordinary income when withdrawn later on down the road rather than being treated like capital gains which would’ve been taxed at lower rates based upon the length of ownership/time held before being sold off through sale or trade.”

Are you saving for retirement in other accounts?

If you have a 401(k) plan, it’s important to also have some type of IRA. The reason for this is that IRAs offer more flexibility than employer-sponsored plans. With an IRA, you can choose your investment options and manage them yourself. You may also be able to deduct contributions from your taxes if they go toward traditional (but not Roth) IRAs.

If you already have a traditional or Roth IRA but want more control over investments and tax deductions, consider opening an S corporation while still contributing to the traditional or Roth IRA through payroll deductions. This will allow any profits made by the business to grow tax-free until withdrawn at retirement age–and any losses incurred can offset profits from other sources like W2 work earnings without affecting eligibility for government assistance programs like Medicaid/Medicare.*

• See IRS Publication 560 for more information about these rules regarding self-employment income

Do you have a target date fund or another kind of balanced fund in your 401(k)?

Target date funds are one of the most popular investment options in 401(k) plans, and for good reason. They’re designed to provide a balance between stocks and bonds that automatically adjusts over time based on your age. So if you’re younger, it’ll have more stock investments; when you get older, it’ll gradually become more conservative with less risk.

The best part? Most target date funds charge lower fees than other mutual funds because they’re managed by professional money managers who know how much risk their clients should be taking on at certain ages (for example, someone in their 40s may want more aggressive investments than someone in their 80s). Target date funds also let investors invest all at once instead of having to choose individual stocks or bonds every year–which makes saving easier!

Have you changed jobs recently and kept your old 401(k)?

If you’ve changed jobs and kept your old 401(k), it’s important to know how much money you have in it. If there’s more than $5,000 in the account, then there are two choices: either leave it where it is or move the funds into an IRA.

If you decide not to convert your old 401(k) into an IRA, then consider rolling over some of that money into a Roth IRA (if eligible). Doing so will allow for future tax-free withdrawals when used for qualified expenses such as education costs or buying a first home–and unlike standard retirement accounts like IRAs and Roth IRAs, there are no age restrictions on when these withdrawals must begin to take place.

Is your current 401(k) investment allocation satisfactory?

Do you know what the right investment allocation is for your 401(k)?

The first thing to do is take a look at your current allocation and see if it matches up with what experts recommend. The general rule of thumb is that you should have about 80% of your money invested in stocks and 20% in bonds, but there are other factors that can influence this number. If you’re close but not quite there, consider making some changes before year-end so that come January 1st 2019, everything will be set up correctly.

If you’re looking for guidance on how much stock versus bond exposure makes sense for your particular situation–and how much riskier or safer it might make sense for someone else’s situation–consider consulting a financial planner or even just asking friends who have experience investing their retirement savings (though keep in mind that everyone has different risk tolerances).

Have you checked to see if there are any administrative fees or other charges that are too high?

You should also be sure to check the fee disclosure statement for your 401(k) plan. This document will tell you how much money is being deducted from your account each year and where it’s going.

It can be hard to understand this information unless you know how to read it. For example, some plans charge an annual administrative fee that covers things like record keeping and communication with participants; others may charge additional fees if you make a contribution or withdrawal that isn’t part of the normal schedule (such as early retirement).

The first step in understanding these fees is finding out what they are–and who pays them! Here’s an example of an explanation from Vanguard on its website: “Vanguard mutual fund shares purchased through our Funds Marketplace carry no sales loads or redemption fees.” What does this mean? It means that when someone buys shares in one of Vanguard’s mutual funds through their website (instead of directly), they don’t have to pay any extra fees upfront when buying those shares–and there aren’t any penalties either if they decide later not use those same shares anymore!

Do you know how much money you will need in retirement and how much risk of loss is involved?

You should know how much money you will need in retirement and how much risk of loss is involved. This is because it’s important to have a clear understanding of how much money you can expect from Social Security and other sources, as well as what your current assets are worth. If this information isn’t available or clear, it’s time to take action by getting professional advice on these topics.

Estimating how much money you’ll need in retirement is a complicated process that involves many factors, such as expected inflation rates and investment returns over time. It also requires inputting specific values like salary increases over time (if applicable), pension benefits, healthcare costs (including long-term care insurance premiums), tax bracket changes due to inflation adjustments, etc.. You might consider using an online calculator such as this one offered by Bankrate Inc., which allows users to enter data related specifically to their situation before providing estimates based upon those inputs: https://www2a2f2c3e1d4b5e6f7f8g7h8i9j0k1l2m3n4o5p6q8r9s10t11u12v13w14x15y16z17{18}19-20

If you’re married, do you want both spouses to work (and therefore be eligible for spousal contributions and other benefits) so that their combined contribution will be greater than what one person could save alone?

If you’re married, do you want both spouses to work (and therefore be eligible for spousal contributions and other benefits) so that their combined contribution will be greater than what one person could save alone?

If your spouse also has a 401(k), it’s important to consider whether they should contribute enough money to their plan before contributing to yours.

You can make sure that your plan is on track by checking these 10 items

• You can make sure that your plan is on track by checking these 10 items:
• The annual fee for the investment option you choose. Some plans have low-cost index funds and others have more expensive actively managed funds, which tend to cost more in management fees. If you’re not happy with what your 401(k) provider offers, shop around for another plan that has lower-cost options.
• Your employer’s match rate (if any). If your company matches some or all of your contributions, make sure you’re maximizing this valuable benefit by contributing enough money to get the full match–and then some! For example, if they match 50 cents per dollar up to 6% of pay, then contribute at least 7%.
• Whether there are any hidden fees or administrative costs associated with investing in particular funds within your 401(k). Sometimes these charges can add up quickly over time; find out what they are before investing too heavily in one fund over another just because it looks cheaper upfront.*

Conclusion

The most important thing to remember is that you have a lot of control over your retirement savings. If you don’t like where things stand, there are plenty of steps you can take to change them. It’s never too late to start saving for retirement–and the sooner you start, the better off you’ll be.