Today’s Prep:
Many of us have a 401(k), but what mistakes can get overlooked? Eric shares a few key points to keep in mind when it comes to your 401(k).
Equipping Points:
401(k)s are known for their ease of use as a great investment tool. Having a 401(k) is great for accumulation and dollar-cost averaging. They are not efficient when it comes to distribution though. What 401(k) mistakes should you try to manage and avoid?
Have you ever left a job and left your 401(k) behind with it? Make sure you rollover your 401(k) when you leave. Eric shares a few reasons why this mistake could cost you. Instead, keep control of it by investing it where you want to when you roll it over to an IRA.
Are you rebalancing enough? Some 401(k)s called target date funds do this on their own. But many funds do not, so you’ll want to make sure this is done on a regular basis. Especially as you near retirement, be sure you are properly allocated. Remember, when it comes to target date funds, these are not to be used in lieu of a retirement plan. Target date funds are tools, but you want them to be working correctly for you.
When you use a 401(k) plan, know that the real client is your employer. So, if you work with one of the provided 401(k) advisors, they will likely keep your employer’s best interests in mind. Talk to your personal financial advisor about your 401(k) to see how it fits in your overall financial plan and investment strategy.
Listen to the entire episode or skip ahead using the timestamps below.
0:46 – The 401(k) is an easy way to save.
3:05 – Did you leave it with a former employer?
5:25 – Are you rebalancing?
7:06 – Is your target date fund right?
9:18 – Who is the client in the 401(k) plan?
Today’s Takeaway:
“The right tool can do the right job, but the wrong tool can do the wrong job. So just understand why you’re using it, and what it’s doing for you.“
-Eric Peterson
More From Eric:
The host: Eric Peterson - Contact - Call: (515) 226-1500
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Financial Strategies: Agree or Disagree?
There are a number of financial ideas that people have differing opinions on. Eric shares today which of these he agrees with or disagrees and why.
Read MoreDivorce Mistakes
Unfortunately, divorce happens. When it does, no one wants to make costly financial mistakes amidst an already stressful time. Today, we talk about the mistakes that can happen and how to avoid them when it comes to dividing up your assets with a spouse.
Read MoreVillains of the Financial World
Just like some of these cinematic villains, some of these financial elements may have a bit of nuance and history that can make it hard to label them all good or all bad.
Read MoreUses for Life Insurance
When you’re younger, life insurance is often thought of as an income replacement as needed. But as you get older and into retirement, you might find other uses for life insurance. When thinking ahead for your estate and how it passes to beneficiaries, life insurance can prove to be a useful tool. Currently, the proceeds from life insurance are tax-free. How does that change how you include it in your financial plan? Eric outlines some of the options and benefits life insurance can provide.
Read MoreUnderstanding Financial Risk
What kind of risks do you take in your financial life? As you get less comfortable with things like climbing up ladders and riding on skateboards, you might also become less financially risky. When you enter retirement, how you view your money in the market changes significantly from your working years. It’s important to look at your portfolio to ensure your investments match your risk tolerance.
Read MoreMailbag: What Financial Advice Should I Share with My Grandchild?
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read MoreThe Good Old Days
Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?
Read MoreMailbag: When Should I Retire?
When is the perfect time to retire? One question from the mailbag asks whether retiring now or in two years will make a big difference. Eric explains what you’ll need to consider and what differences you might encounter from a work and lifestyle standpoint. Then, he answers Nancy’s question on how important it is to have a financial advisor in retirement.
Read MoreDiscussing Dave Ramsey and His Core Beliefs
More than likely, you’ve heard about financial commentator, Dave Ramsey. Today, we talk about some of Dave’s core beliefs and how it may differ from those of a licensed financial advisor. While Dave’s tips and baby steps have helped people, it’s worth taking some of his advice with a grain of salt.
Read More