If you think 401k plans are running on cruise control most of the time, your BBB® would like to inform you that it may not be the case anymore. The way it works is: you get automatically enrolled when you join the company, the money is deposited regularly and then you leave it alone. However, this hands-off approach may not explore the full potential of your investments.
By making small adjustments, you may be able to lower this year’s taxes and improve your retirement fund. If you think this is something you might be interested in, there are a few steps to take:
1. Consider the big picture
If you went through major changes since you opened your account (got married, had kids, got promoted, switched jobs), you may want to take everything into consideration. For example, if you and your spouse now have your savings in an IRA account and your former employers are holding your 401k, you may want to review all your household accounts.
2. Increase your contributions
A typical 401k saver puts away 6% of the monthly income, but a study from Boston College suggests that a household would need to save 15% to ensure a comfortable living after retirement.
3. Lower your fees
Lowering your expenses may be the simplest way to grow your returns., so look at the most pricey assets in your 401k plan. Generally, large companies charge less than 0.5 percent to manage your account, but you can get that number down to 0.20 percent if you go with a broad-based index fund.
4. Consider trying the new 401k services available
Make sure to stay in touch with your plan’s newest features as they can sometimes include important tools like investing basics, healthcare education, budgeting and much more.
To find out more, you can ask your benefits department or visit your 401k plan’s website.
For more information you can trust, visit bbb.org/Evansville!