Financial solutions

byAentitiesU

103 followers

7 years ago

FINANCIAL SOLUTIONS

MAKING YOUR 401(K) WORK FOR YOU. PART 1
STARTING FROM SCRATCH

Do Not accept the default savings rate! See the thing with new employees is that they are increasingly likely to be signed up for an automated retirement account at work, more often than not by having 3 percent of their pay deposited in their company's 401(k) plan. But saving 3 percent of your salary isn’t much but it is certainly better than no savings all, it may not be adequate enough to maintain your current lifestyle to be carried in retirement. OK so when (yes when, not if.) you get a raise, save 1 percent more every year until you can get up to the minimal goal of 20 percent of your pay.
Usually the most common 401(k) match is 50 cents for each dollar saved up to 6 percent per pay. If your employer offers a 401(k) match, make sure you save enough so that you can take advantage of it. Capturing a 401(k) match is in my opinion, one of the fastest and most painless ways to boost your 401(k) balance and it’s working for you.
Be smart and grow your money.

Stay in it until you are vested. Well it’s nothing new but if you didn’t realize you won't get to keep the 401(k) match from your employer until you’re fully vested in the 401(k) plan, which can typically take as long as four to six years of service at that company. Sometimes employers may allow an employee who leaves before they are fully vested to keep a portion of the match based on their years of service, while other companies will require employees to actually forfeit the entire match. It can sometimes be worth thousands of dollars to continue to work for a company until you are fully vested in the 401(k) plan.

Roll over your 401(k) if you leave your job. I know it may be tempting to ask your company to cut you the check, but it’ll cost you too much in taxes and penalties in the long run. In some instances, you can actually leave an old 401(k) account alone for as long as you want,(I’m actually doing it now from my last job) where it will remain with one of those fancy brokerage firms that admins your account. If your previous company removes you from the plan, you’ll need a new place to collect your funds. In this case I rolled the money into an IRA, or into a 401(k) at your new job. Be sure you talk with your plan admins also the new firm where you’ll save your money. Look, be certain you follow the rollover rules and avoid those pesky penalties.