A New Year means a chance to make some new resolutions.
But this year, in addition to the usual goals we all tend to set (like going to the gym, spending more time with family, etc.), we suggest doing something a little different:
Resolve to actually start preparing for retirement.
Every January, we meet people who intend to retire sometime within the next few years … but who have not even started the process of preparing for retirement. So whether you’re a year away from retirement or ten, our advice is simple: make 2017 the year you start getting things done.
Over the next few months, we’re going to share a few practical retirement-related resolutions you can set. They’re all very simple, and apply to pretty much everyone.
So without further ado, here is:
Resolution #1:
Get to know your 401(k)
A 401(k) is one of the most common ways to save for retirement, but many pre-retirees know very little about them other than whether they have one. But because your 401(k) is such a big part of saving for retirement, it’s critical that you:
- Take advantage of all it has to offer.
- Understand exactly what types of investments are in your 401(k), and if they’re right for you.
Here are a few questions to ask regarding your 401(k):
- Look again at the menu of investment options in your 401(k). Have you made your selections purposefully, or did you just accept whatever the plan provider chose for you?
- Many 401(k) plans allow you to invest at different levels of risk. Are you investing aggressively, moderately, or conservatively? Do you understand the difference? Do you know which is right for you?
- Many 401(k)s are invested in one or more investment funds. Each of these funds contains a prospectus, which is a document that describes how the fund works, including its objectives, strategy, past performance, and expenses. Have you read your prospectus? Do you understand how the funds in your 401(k) are supposed to work? Do their objectives match their own?
- What will you do with your 401(k) once you’re retired? You have three basic options: leave the money where it is, withdraw it, or roll it over to an IRA or Roth IRA. Do you know which option is best for you?
A 401(k) is an absolutely indispensable retirement saving tool. If you have one, you owe it to yourself to learn more about how it works, how it’s performing, and whether the investments inside are right for you. So as you set your New Year’s Resolutions, put “Getting to know your 401(k)” high up on the list.
Of course, as you search for answers to the questions above, don’t forget that our team is here to help. Please feel free to give us a call at Minich MacGregor if you ever have any questions about your 401(k) or retirement in general.
In the meantime, have a happy New Year!