Avoid These Classic 401(k) Retirement Mistakes
Of course, not contributing to your 401(k) retirement fund is undoubtedly the biggest blunder that you can make as you approach your retirement age, no matter how appealing it may seem. Between the fluctuating market and overstretched budgets, cashing out your 401(k) retirement fund might start to look very tempting right about now.
Yet if you want to reach retirement with a sizable nest egg – and have the funds to enjoy that Florida retirement that you’ve always dreamed of – then avoid these classic 401(k) retirement mistakes.
Not Rolling Over Your 401(k). In the current economic climate, job changes and losses have been occurring at unprecedented rates; if this scenario sounds familiar, make sure that you roll over your old 401(k) to your new retirement plan. Even if you lose your job and are tempted to just cash out your retirement savings to pay for bills, resist temptation, as you’ll lose out on precious time for your savings and investments to grow into even more money.
Here’s a simple rule to remember: if it’s money for retirement, don’t touch it until you actually reach your retirement age!
Not Netting The Full Employer Match. If your employer still offers matching contributions to your 401(k) retirement fund, then make sure you contribute as much possible in order to get the maximum amount. Turning your back on a full employer match – or not contributing to your 401(k) at all – is like turning your nose up at free money!
Take Out A 401(k) Loan. What might sound like a smart idea at the time can very quickly lead to financial ruin, especially during the current credit crunch. If you choose to take out a 401(k) loan to pay off those troublesome debts, you best be sure that you have job security, as losing your job means you’ll have to pay back the loan in full. Instead of turning to your retirement savings as an answer to toxic debts like credit card bills, examine and change the behavior that got you there in the first place.
Investing In One Company. Remember the debacle with Enron? Innocent workers lost their life savings when the company went bust, since their entire retirement savings were invested in the stock. Make sure your 401(k) investments are diversified enough to keep your savings safe and sound.
For more information on smart retirement planning, visit www.kenhimmler.com, the IRA and 401(k) experts!
Authored by Kenneth Himmler, Sr.
Filed under: Financial Advice