How You Can Improve Your 401(k) Plan
Not saving is one of the biggest challenges to retirement readiness. If you don’t think you can afford to save, you should start small… saving even 1%. When you are able to increase your contribution, do so and stay with it.
2. Work the Match.
If there is an employer match, contribute enough to get the full match (which is essentially free money.)
3. Diversify and Rebalance.
A professional investment advisor should automatically do this for you on a regularly scheduled basis. It should be part of your investment package.
4. Don’t Time the Market.
Too often investors sell out of a losing fund when the market starts going down, effectively locking in their losses. People also tend to reduce their contributions when stock prices fall.
Not only will you likely miss the rebound, you’ll also miss out on the opportunity to buy investments on the cheap. Consistent contributions are “dollar cost averaging” and this helps maximize potential growth.
You should check your account a few times a year, to make sure it’s on track.
5. Think Twice Before Borrowing or Withdrawing.
Don’t let borrowing or early distributions be your crutch for overspending. Payback schedules or penalties and taxes may affect growth.
6. Take It With You.
Don’t forget about your 401(k)s or IRAs from previous employers. If your old company changed investments or investment advisors, your money might be sitting in a money market fund.
Keep your 401(k)s together and have your investments working in conjunction with your risk tolerance.