In today’s economic climate financial questions have never been more important. The average American doesn’t necessarily want to go back to school and get a degree in finance in order to be able to manage their money. Luckily it doesn’t have to be that complicated. When it comes to retirement planning, if all you ever do is focus on your 401k that will ensure that you can retire when you’re ready.
There are a few simple things you can do to ensure that your 401k grows steadily during your working years. First, how much money are you contributing each month? The average American worker contributes only 5% of their paycheck to their 401(k) account. This is perhaps in reaction to the fact that the average employer matching contribution is 6%. In truth, you should be putting away 15% of your salary for when you will be ready to retire. The 401k rules do limit how much you can contribute in a calendar year. In addition, many companies also have a contribution cap. For the average American worker, the contribution limit is $15,600 a year. Each year this is evaluated by the US government to determine if the maximum level should be raised. There are provisions within the 401(k) guidelines to allow high income earning individuals to have a higher cap. If you’re not sure what your contribution limits should be, check with your benefits administrator or your human resources department.
The second most important thing you can do to ensure the health of your retirement account is to make sure that all of your money is in one place. If you change jobs, you may have left your old 401(k) account behind. A 401(k) rollover is all you need to do to get all of your money in one place. Luckily 401k rollovers are simple to execute. Check with your current human resources department to get the necessary paperwork to request the rollover. 401k accounts never disappear, even if you’re not contributing monthly to them. Individual 401(k)s, however, without a steady influx of contributions are never going to grow very strong. Even though it’s not a seamless process, 401(k) rollover answers are available both from your company and online.
Although it’s recommended to have more than just a 401(k) account to help ensure that your retirement is well-funded, just having a 401(k) account will get you most of the way there. If you can set a reasonable budget for your current daily expenses, planning for this time of you life will be a breeze. In addition, with medical advancements and shifts in cultural attitudes, traditional retirement is becoming a thing of the past, so you many opt for a semi-retirement, or even just downshifting into a different career or to a less stressful job. Making choices like these mean that your investment dollars are going to go that much farther and that’s great news.
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