The 401(k) is generally seen as a good way of investing for your retirement and like anything, there are ways to make sure you get the most out of your money for later in life, when you likely won’t be bringing in a traditional income.
The best thing you can do is actually invest! As the rat race of today takes its toll, it’s only natural that people can hardly look past next week, let alone to where they will be financially by the time retirement comes. If your employer offers matching contributions, that’s as good as free money, so be smart and take advantage of free money!
If your employer promises to match what you pay in, step back and see if you can put in those extra few dollars to really maximize your employers input. There is no catch with this, the money the company invests is absolutely free and will grow once it is invested into stocks and shares, so you would be a real fool to overlook this. Try and contribute as much as you can without rendering yourself penny pinching at the end of the month. The only thing to be aware of is that you may have to wait for your employer’s contributions to vest. My company’s contributions vest 20% each year once you’re eligible, so staying a minimum of 5 years has a big benefit. Of course, any amount that you contribute as an employee is 100% vested from day 1
The 401k may start to become scary to people when they have to think about where the money is actually being invested. Not everybody is a financial whiz and keeps up to date with the stock market but try not to let that scare you off. There are a lot of good investments for your people Learn more about the Suncorp superannuation offerings at https://www.suncorp.com.au/super/
Take a little bit of time to research the stock market and if there are advisers offering some of their time for free, get some free education from them. A little bit of knowledge is a powerful thing and it took me a few extra years to learn that opening an individual 401k was actually really simple and could boost my retirement savings.
Don’t check your investments too often, it will only lead to worry when things aren’t going well, even if your strategy is a solid one. The investments in your 401k are supposed to be for the long term and checking them every few months will allow you to see the bigger picture and alter plans where you see fit.
If you decide to leave your job always make sure you roll over your funds into a new account and don’t be tempted to cash it early or you will have to pay at least a 10% penalty. Yes, there is money there and it is a very tempting prospect to dip into it, but that money was earmarked for retirement and it should stay that way!