If you have not already begun to plan for your retirement, one of the simplest ways to do this is to utilize your company’s 401 (k) retirement plan. If you have already started paying into a 401 (k), you need to make sure you are not committing any of the following major 401 (k) mistakes.
1. Too Much Company Stock: Having too much company stock is a huge risk. Not only have you bet your retirement savings on the success of a single company in less than stable economic times, but too much company stock can actually hurt your returns. In fact, portfolios with more than 1/5 in company stock can expect to accumulate 18% less retirement wealth over 20 years than a portfolio with less than 10% in company stock.
Diversify your retirement funds beyond the company you work for.
2. Inappropriate Risk: While older workers put too much stock in stocks, younger workers tend to have too much money in bonds. This is a big problem with workers earning $25k or less. These individuals tend to have portfolios with inappropriate risk or diversification. Undiversified portfolios with inappropriate risk may have 22 percent less projected retirement wealth over a 20 year period.
3. Not Contributing: A third of active 401 (k) participants fail to contribute enough money to get the full company match, while sixty percent did get the full employer match but are saving below the limits allowed by the IRS or the plan.
Only 7 percent of active 401(k) participants came within $500 of the IRS or plan maximum and thus received the full tax break.
To ensure that you are making wise retirement decisions, consult a financial adviser, like Safe Retirement Solutions. Safe Retirement Solutions is your full service, independent financial advisory firm dedicated to providing you with the very best in retirement income planning.
If you have any questions about what you have just read, or if you would like to know more about retirement planning, consult a financial advisor like Safe Retirement Solutions by calling 877-268-4086 or visit our website today!
We help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.