Today’s Prep:
Do you have a question about your 401(k)? There’s a good chance you’ve wondered about at least one of these five frequently asked questions when it comes to your 401(k).
(Click the featured times below to jump forward in the episode)
Equipping Points:
401(k)s are often a person’s largest asset outside of their home, especially because it is relatively simple to sign up for through your work. A typical rule of thumb is to save between 10-15 percent of your income toward retirement. But past that, there are common questions everyone asks at one point or another when it comes to 401(k)s. Eric answers five FAQs on today’s episode of Retirement Ready.
Is it worthwhile to use the advice offered through the 401(k) plan at work or not worth the fees? Eric says to ask what kind of services you are actually receiving for that advice. Will the funds be managed or is it a one-time thing to get the funds set up?
Should you contribute beyond the company match? Definitely always contribute at least up to the match! But after that it can get a little more complicated. You may want to contribute more to a Roth IRA after you’ve contributed to the 401(k). There may be future tax benefits in doing this.
Are target date funds a good idea? The target date will shift the allocation as you get older so they are less aggressive. Eric says to choose a target date a few years beyond when you actually plan to retire if you do a target date fund.
Finally, when should you take money out? While these accounts are relatively easy to set up, be sure to work with a financial advisor so that whatever you do with the money aligns with your financial plan.
Listen to the full episode above as we revisit this topic or click on the timestamps below to get your 401(k) FAQs answered.
[1:47] – Should you get advice through the company’s 401(k) program?
[3:21] – Should you contribute as much as possible to a 401(k) or just up to the match?
[6:00] – Should you use a target date fund?
[8:28] – Is it a bad idea to take a loan against the 401(k)?
[9:54] – When should you take money out and rollover the 401(k) to an IRA?
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