Does the thought of your 401(k) instantly turn you into a stress ball? Let’s face it—adulting is not for the faint of heart!
However, your future Betty White self is NOT going to be happy with you if you don’t plan for retirement.
But, don’t worry. With these simple tips from Consumer Reports, you can make sure your 401(k) is on point…and still have time to enjoy a Netflix-and-chill session.
You’re not taking the free cash!
Your employer will match your contribution if you contribute a certain amount (usually 6 percet of your income). Unfortunately, most people are not contributing their maximum allowed amount, and missing out on the employer match. So, email your CFO or talk to your H.R. manager—just don’t leave that free money sitting on the table.
You’re not saving enough money.
The simplest advice, but also the most effective. You need to reconsider how much you are actually putting in the bank. A recent survey from The Center for Retirement Research at Boston College found that families need to save around 15 percent of their earnings in order to provide for retirement. Sadly, they also found that most people fall shockingly short of that amount. You don’t have to give up on your favorite splurges, but make it a goal to set aside a certain part of your paycheck each month. Then, keep the money in a separate account where you can’t touch it while you are out with friends on Friday night. Your future self will thank you!
You didn’t take the Roth option.
If your employer offers this option, it’s the way to go! Everything in your Roth 401(k) will be tax-free, which makes it a better bet than a traditional 401(k) in the long run.
You’re not investing for the long haul.
Don’t make investments based just on today’s economy. You need to think about where you are going to be 20, 30, 40 years from now, as well as where your investments will be. Age-appropriate investments are a must, meaning a good mix of stocks and bonds. You can meet with an accountant to discuss your options, or you can rely on Target Date Funds (TDF) with which you can align your proposed retirement date.
Your account is too expensive.
Is your 401(k) too expensive? If so, don’t worry! You are not stuck in the plan. Opt for a. IRA rollover and move your money into a account with negligible expenses.
There, you did it! Doesn’t that feel good? Now you can relax…
[h/t: Consumer Reports]