Common 401(k) FAQs

Today’s Prep:

What are some of the most frequently asked questions when it comes to a 401(k)? There can be a lot to a 401(k) so we’ll help you plan correctly.

Equipping Points:

If you get a 401(k) through work, you might have questions or certain scenarios that come up. Eric shares his thoughts and some guidance on what you should keep in mind when it comes to these retirement accounts.

When your company has a 401(k) program, they may offer low fee advice. Is this something you should take? Eric says when you’re in the accumulation phase, you want to lower your fees as much as possible. But know what that fee covers. Will they be creating an entire plan or just helping you choose the funds? Inside your 401(k) there are usually target-date funds. You might find that the target date funds are similar to what the 401(k) program advice provides for a fee.

How much should you really put in that 401(k) account? Should you put as much in as you can or only up to the match? This used to be a question more when people were deciding between a Roth IRA or 401(k). Now, so many 401(k)s offer a Roth 401(k) option. Saving in a tax-free account is always better. The nice thing about a 401(k) is that it’s a payroll deduction, so you are systematically investing without having to do anything. You can put a lot more into a 401(k) than a Roth IRA, but if you can do both, do both.

Are target-date funds a good idea to use? Eric says this is a good way to put your savings on autopilot. But, understand that your contribution should be a different risk tolerance than your balance. Also, find out what happens once you reach that target date.

Finally, is a 401(k) loan a good idea or a bad idea? You are taking money out of the market, so if you can find a better way to do it then do that instead. But if something unexpected arises, it is an option.

Listen to the entire episode or skip ahead using the timestamps below.

1:11 – Company plan offers advice for a low fee, should I take it?

4:04 – Do I put as much as I can in or just up to the match?

6:03 – Should I use target-date funds?

7:16 – Is a 401(k) loan a bad idea?

Today’s Takeaway:

As you’re accumulating, depending on what stage your life’s in, your contribution should be a different risk tolerance than your balance.

-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 Wisdom from Mark Twain

June 13, 2024

In the latest episode of the Retirement Ready Podcast, Eric invites us to explore the timeless wisdom of Mark Twain and how it applies to modern financial planning. Mark Twain, known for his wit and keen observations, offers quotes that are surprisingly relevant to today’s financial landscape. Eric takes these quotes and translates them into practical advice for those planning their retirement.

Read More

Understanding Bonds in Today’s Market

June 6, 2024

Are bonds really the safe investment we’ve always been told they are? What percentage of assets should a retiree or pre-retiree hold in bonds? In today’s episode, Eric addresses some of his most frequently asked questions about the world of bonds…

Read More

Understanding Your Financial Statements

May 30, 2024

Financial statements can often feel like a foreign language, filled with jargon and numbers that seem to have little relevance to your everyday life. However, understanding these documents is crucial for effective retirement planning. In the latest episode of the Retirement Ready Podcast, Eric breaks down the essentials of reading and interpreting your financial statements.

Read More

From Graduation to Retirement

May 23, 2024

This one goes to the grads! Whether you know someone graduating high school, college, or even preschool, graduation marks a new stage and season in life. Similarly, retirement is a new chapter in life. It’s a time of change, celebration, and sometimes, uncertainty. On today’s show, we talk through the similarities between leaving school and entering retirement.

Read More

401(k) Mistakes

May 16, 2024

Your 401(k) likely plays a major role in your retirement savings. That’s why it’s important that it’s set up and functions in the way that’s most beneficial to you. Following our last podcast about beneficiary mistakes, now we focus on common mistakes people make with their 401(k).

Read More

Beneficiary Mistakes

May 9, 2024

In this episode of the Retirement Ready Podcast, Eric guides us through the critical yet often overlooked details of beneficiary designations. Learn the simple yet vital steps to prevent beneficiary blunders that could lead to unnecessary headaches for your heirs. Eric calls these errors “low hanging fruit” because they’re easy to fix yet can save your family from future heartache.

Read More

How Emotions Can Impact Your Retirement Plan

May 2, 2024

Dive into the world of financial emotions in this episode with Eric Peterson. Discover how greed, fear, hope, and pride can make or break your investment strategy. Eric unravels the complexities of managing emotions to ensure a secure and enjoyable retirement.

Read More

Retirement Planning Statistics

April 25, 2024

Retirement is closer than you think, but are you ready? With a staggering number of people lacking confidence in their retirement savings, Eric shares the misconceptions people have and what mistakes can derail someone’s financial future. Many people feel inadequate when it comes to what they have saved in their nest egg, uninformed about the pitfalls of target date funds, and unprepared about the reality of leaving the workforce earlier than expected.

Read More

Mailbag: Should I Fire My Broker?

April 18, 2024

Navigating life’s financial crossroads can be tricky, especially when it involves your financial future. In this episode of Retirement Ready, Eric addresses these complex issues head-on. How do you best evaluate your broker and your investment performance against the S&P 500? Eric says a lot of that comes down to setting expectations and understanding the risks. Then, Holly wants to know what to consider before making a midlife career change.

Read More

Putting It Off

April 11, 2024

We are all guilty of procrastinating from time to time. Financially speaking, though, this can get you into a lot of trouble. Let’s talk about the areas where it might feel better to kick the can down the road.

Read More

Leave a Comment