August 12, 2014
Participating in a 401(k) or similar retirement plan is a tax-advantaged way to save for retirement. If you have the option of participating in a 401(k) plan, avoid these five common mistakes.
* Failing to participate fully. Too many employees opt out of the plan or don't contribute as much as they can afford. At a minimum, try to set aside enough to receive the full employer-matching contribution. For example, your employer might offer to match 30% of the first 3% of payroll. That match is equivalent to a 30% first-year return on the amount you contribute.
* Over-investing in company stock. Don't invest too much of your plan contributions in company stock. Remember, even if the company is doing well now, things can change. And if the worst happens and you lose your job, you don't want to lose your retirement savings too. (Think of Enron employees.) If your employer uses company stock for the matching contribution, you may have no choice. But at least you can select other investments for your own contributions.
* Failing to diversify. Choose a well-diversified mix of investments in the plan. Then continually monitor and rebalance your investments as they grow. Coordinate your investment choices with your non-401(k) savings to make sure you have an appropriate mix. Seek professional advice if you need it.
* Borrowing from your plan. Take a loan from the plan only as a last resort. Remember, these savings are for your retirement, not to fund everyday needs. When you borrow from the plan, you're losing the tax-deferred growth on those funds.
* Withdrawing your savings if you change jobs. It's tempting to cash out your savings if you change jobs. But if you do, you'll owe taxes and probably a penalty. More important, you'll lose the future tax-favored growth that you might need in retirement. Instead, arrange a direct rollover into an IRA or your new employer's plan.
There’s no better time to talk about goals than the start of a new year. And what better topic than your career? The following are a few tips to help you set reasonable and achievable goals this year:
The New Year is the best time to take stock of your finances. So, as you begin the season of self-reflection and goal-making, take the time to review your spending and start making plans for a financially healthy 2020! Here are a few tips to get you started:
The holidays are all about spreading cheer…not calories and cavities. So, why not try a few dessert recipes that put a healthier spin on some holiday treat favorites. We offer a few tested (and delicious) recipe ideas for you here: