Avoid These 401(k) and IRA Mistakes
When it comes to saving for retirement, many people take a set-it-and-forget-it approach. But not paying attention to our 401(k) and IRA accounts could cause you to miss valuable savings opportunities. Avoid these seven mistakes:
Not contributing enough to get your full employer match. If your employer matches your contributions to your 401(k) plan, you should try to stretch enough to at least meet their maximum match amount. Otherwise, you are essentially leaving money on the table.
Neglecting to maximize your contributions. With so many immediate financial needs, investing for a long-term goal like retirement can be hard to prioritize. While you may not be able save up to your 401(k) contribution limits (for most people, that’s $19,000 in 2019 plus an additional $6,000 catch-up contribution for those over age 50), you should save as much as you are able. If there’s any extra room in your budget or expenses, consider dedicating that money to retirement. Or when you receive your annual raise, allocate it to your 401(k) savings.
Playing it too safe by investing in an overly conservative way. It can be scary to take chances with your hard-earned cash, but if you only choose safe investments like cash or CDs, you run the risk inflation outpacing the low returns and thus being worth less over time.
Not reviewing your investment allocation regularly. Your asset allocations will inevitably need to change as you age, as the risk you’re willing to tolerate in your twenties will likely not be the same as your fifties. This means you should review your portfolio at least on an annual basis.
Not taking advantage of catch-up contribution options. The closer you get to retirement, the more you may regret not maximizing contributions in the past. Fortunately, once you turn 50 years old, you have the chance to catch up a bit and your maximum annual contributions go up another $6,000 for a 401(k) and another $1,000 for your IRA.
Forgetting about old retirement accounts. If you’ve changed jobs, there is a chance that you left an old 401(k) plan with your former employer’s plan provider. Of course, the money is still yours, but it may not be doing as much for you as it could if you rolled it into an account you are actively managing now.
Taking too much of a do-it-yourself approach. Managing your own retirement planning can be confusing if you do not have the knowledge and skills to make the best choices. Seeking the help or guidance of a finance professional can remove the doubt and emotion from your investment decisions and ensure you are on track for the retirement you are working toward
Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Avenue, Carpinteria CA. 93013, (800) 874-6910. Randall Wealth Management Group and PlanMember Securities Corporation are independently owned and operated. PSEC is not responsible or liable for ancillary products or services offered by Randall Wealth Management Group or this representative. CA Insurance License: #0I08678.
This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.