7 Useful Tips To Maximize The Value Of Your 401(K)

22-02-2018 | Adriana |

Having a traditional retirement savings plan is the first step towards a happy retirement. Any penny saved is a penny earned indeed! But did you know you can maximize the value of your 401(k)?

The need to set up a 401(k) plan is merely just stating the obvious. If you employer offers you access to a savings plan, the smart thing to do is to take immediate advantage.

The sooner you start stashing your money away, the bigger you retirement nest egg will be. But did you know you can take additional steps in order to boost the value of your 401(k)?

The opportunity to contribute to a retirement plan though, is often not enough to maximize your returns.

If you’re wondering how can you make the most of your retirement savings, here are some useful tips to keep in mind.

1. Set up a 401(k) plan as soon as possible

Early birds always get a head start. And the analogy is valid for 401(k) plans as well!

Contributing to your very own retirement savings plan is a wonderfully smart decision. And you should know time is on your side. But if and only if, you’re able to start as soon as possible.

Contributions to your 401(k) plan are limited, so the sooner you participate, the bigger your savings will grow in time.

2. Take advantage of the company match

If you’re wondering how much money should you contribute to your retirement plan, the answer’s simple: as much as you need to meet your company match.

In some cases, companies offer to match the employer’s savings. Not only does this translate into free money, but it can be an amazing opportunity for you to maximize the value of your 401(k) in ways few people can imagine.

If you’re worried about not being able to afford matching your employer’s contribution, find ways to spend less and save more! It would be a shame to let such an opportunity slip away.

3. Avoid cashing out your 401(k)

While the money you contribute is yours, it’s always best avoid cashing out before you’re ‘supposed to’.

You have every right to borrow against your 401(k), but if you’re looking to maximize the value of your plan, you should consider leaving your savings intact for the time being.

Look at your retirement savings plan as a long term investment vehicle. The moment you start cashing out before you should, you lose control over your savings and interrupt all progress. Getting back on that horse will be difficult, if not impossible.

4. Stay away from hefty investment fees

We’re losing money to fees on a daily basis. But when it comes to your retirement savings, unnecessary hefty fees are best to stay away from!

Contributing to your 401(k) doesn’t limit you to blindly stashing your cash away. Your traditional retirement savings plan works as an investment vehicle. And although you might not be aware, you can always have a say when it comes to how your money is invested.

In order to avoid losing money to fees, opt for low cost investments and watch your money grow. It’s always recommended to be aware of your money’s whereabouts. Even when it comes to retirement savings plans!

5. Rollover your retirement savings when changing jobs

The average person today changes jobs every few years. And it’s only normal to go where you feel appreciated and get paid better. But what the average person today also does, is cash out their 401(K) when they leave.

If you agree continuity is important, then you should agree it’s best to rollover your plan and take it with you when you clear your desk.

6. Diversify your investment assets

Should you invest in bonds? Aren’t stocks a better option? The best way to maximize your 401(k) is to simply diversify your investment assets!

Having a diversified investment portfolio is always a good idea. And the same applies to your traditional retirement savings plan. Why put your eggs in only one basket, when you can take advantage of all the baskets out there!

7. Don’t settle for a 401(k) alone

Speaking of baskets and where to put your eggs, if you really want to maximize your retirement savings, look into complementary options as well.

If you can afford it, contributing to a Roth 401(k) can be a great way to stash even more money away for your golden years. Seeing how a traditional savings plan has its limits, you can choose to contribute to a separate plan as well.

When you’re looking for ways to maximize your 401(k) plan, keep in mind the more you save, the happier your retirement will be.

It may seem like there’s still time to think about old age. But when it comes to planning ahead, nothing’s better than starting today! Maximizing the benefits and value of your savings for years to come is key to a carefree, bright financial future.

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