401k Investment for your Retirement
For many people, the subject of saving for
retirement has become more serious as we now have aging population and
there seems to be a potential social security system in the near future.
During our golden years, we would need to survive by acquiring the nest
egg as early as possible. There are a few avenues such as Mutual funds,
IRA's and 401k options which we could use for preparation of our future.
Out of all, 401k becomes the most popular choice. The main reason why
401k is popular is that many employers not only offer the option at
work, they also match a certain percentage of your own contribution out
of your salary. It varies that how much the employers will match, but
usually it ranges from 25% to 100%. However, the number of employers
that do not match at all is on the rise, unfortunately. Another
outstanding benefit via 401k is that the amount you contributed as en
employee will be made with pre tax monies.
Also the 401k plan is very flexible that gives you choices regarding
your overall investment strategy. There are some proven methods for
investing in 401k that will depend upon one's age at any given time. For
example, whether the employer matches or not, if a young individual
invest in 401k he/she will have plenty of time on his/her side. That
person can invest more aggressively if feels comfortable because the
younger the investor is, the more time is available to ride out
fluctuations in the stock market. The market will always have ups and
downs over a period of times. As the investor gets near retirement age,
it would be prudent to switch the strategy to more conservative way,
thus making investment much safer while sill more profitable than a
traditional savings account.
Previously only few larger companies
were offering employees a 401k plan for their retirement, and it
was not an option for the self employed individuals. Luckily,
this is not the case in today's market place. Now there is a
plan called Solo 401k or Individual 401k which allows business
owners with no employees, but with only partners or a spouse..
They can set up a retirement plan that is similar to traditional
401k offered by any larger companies.
Are you thinking of quit your job and leave the work place, but
you have 401k plan with your current employer? You don't need to
leave your own retirement investment in their hands after
resignation. You have an option of rolling over your own 401k
plan, and you better take advantage of this option. By doing
this rollover, you can still keep control over your investment
that you have been putting your time and effort. When it
happens, the money that is in 401k account will be rolled all
together into another approved investment account. There are
programs called a Simple IRA, a SEP IRA account as well as
another 401(k) accounts. But it is always the best practice to
consult a financial advisor or specialist who can help you
understand what the best option and opportunity for you as an
Always keep in mind that you never
take out money out of your 401k account either all or in part,
because there will be a 10% penalty on the portion that is
withdrawn if the withdrawal happens before you reach the age of
59 and half. When you decide to execute a rollover option to
deal with accrued 401k investment, it should be done as one
transaction so that you can avoid any of such penalties or fees.
If you are thinking of investing for your retirement, you need to ask
your employer on how much you are allowed to contribute and what they
can do to match what you have contributed. And then speak with financial
advisor regarding next steps to take. It is always safe to get a
professional advice before you move on.