Get your 401k ready for retirement

If you think you'll be ready to leave the workforce in a few years, here's a 6-step plan to ensure your 401k is ready, too.

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38Comments
Nov 4, 2013 10:07PM
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So lets see,get out of stocks but don't buy bonds buy fixed income which pay about 1.5 % while inflation moves about 3.5 % so you only lose about 2 % a year. Sounds like good financial advice 
Nov 8, 2013 7:39PM
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Sadly, there are a number of posts here that demonstrate a clear lack of understanding about 401(k) plans.  The general rules are you can defer up to $17,500 or 100% of your income, whichever is less, unless you're 50 or older, then the number increases to $22,500.  If you receive good investment advice, you can do extremely well using a 401(k).  The thing is, you should stay diversified and not get greedy.  People who moan and groan about "losing all their money in the stock market" probably put all their money in one stock, hoping to get rich quick.  In my opinion that is a really dumb idea.

"Who could possibly put $17,500 per year into a 401(k)?" you might ask.  If a husband makes good money, but has no retirement plan at his work but his wife works making $18,000 per year and does have a plan, she could defer $17,500 of her pay, and if they file their taxes jointly, they've just lowered their combined tax bill by a nice chunk.

As with anything, don't listen to no-nothing panic-mongers who think investing is some, huge conspiracy.  The fact that there are a few bad doctors doesn't mean you should stay away from hospitals, in the same way, just because there are a few scams out there doesn't mean investing doesn't work.


Nov 9, 2013 12:46PM
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I know a guy who was riding the wave of the techno-boom back in the 90s.  Got involved in an "investment club".  They were all making good money and got greedy.  They thought they would make a mint in a short amount of time and be set for life.  Well, the "techno-boom" went BOOM and with it, he and his cronies not only lost the phenomenal profits on their investments, but a good portion of their original investments as well.  I don't know how the rest of the club did, but this person is now retired and struggling.  Slow, steady and patient, that's the conservative approach.  Start with a regular savings account, no matter how small.  When you have enough saved up in this account, move it to something that will increase your return -- not hard to do with "savings account" interest rates these days.  And, when you feel comfortable with the size of your little nest-egg, watch for opportunities to invest part of it.  Don't go whole hog.  Then, sit back and watch for the next opportunity.  Slowly but surely you will find your assets growing.  Of course, this is advice more appropriate for young investors.  You old people like myself, have to look more toward budgeting the income from the investments we have made.  And, contrary to the belief of some people these days, Social Security is an investment and not an entitlement.  You deserve to reap the harvest of the money you invested into the system over the years.  It is not your fault that the people in charge of growing our retirement fund robbed it instead.  Be steady, be patient, and good luck!!!
Nov 9, 2013 11:31AM
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Even though I know a fair amount about my finances, I still occasionally read MSN money articles to either remind me of this or to possibly learn something.  I also know that not everyone on the planet has had the opportunity to learn how to handle their money or to simply make wiser lifestyle choices.  If you post, please stay positive.  Snarkiness is neither entertaining nor enlightening.  Thank you.
Nov 9, 2013 12:03PM
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Diversification IS the key.  Remember, "don't put all your eggs in one basket".  That sage advice is true even today.  A good financial adviser will steer you into investments that ebb and flow with the ecomomic conditions.  Whatever the economy does, there are going to be investments that increase and decrease in cycles that are opposite one-another.  Depending on your age, you will want assets that you let set to ride out economic storms.  Others, you will want to liquidate and reinvesst in more short-term, high-yielding investments.  These are riskier, but can give you a greater return on your investment.  Don't put any more money into this kind of investment than you are willing to lose.  My retirement fund consistently yields an annual return of 7.5%.  A long-term investment I made in real-estate 18 years ago has increased in value 1,000%.  Another that I made just two-years ago has increased in value by about 25%.  Be sure to take into consideration the liquidity of your investments, or the ability to get low-interest loans against them if you run into hard-times/an emergency.  Good luck!!!
Nov 9, 2013 1:18PM
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A lot of companies match part of what each employee put into a 401k, and some others put some profit-sharing in it each year, so it can grow quicker than one would expect. We should each have a long term plan and if you work for someone else, a 401k is a good part of that plan. Most of us would not miss too much 3-6% of our paycheck, for some added future security. Not sure why anyonen would think 401k's are a plot by President Roosevelt, Reagan, Bush or Obama to get their hands on our money ???
Nov 9, 2013 9:52AM
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keep pre programing people about save your own money , because the 40 some years you gave the GOVERNMENT for social security has already been spent and the politicians do not want to give it back to you !!! But do not cut our defense budget and make sure the million and billionares get bigger tax breaks, God Bless America
Nov 9, 2013 2:05PM
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One thing you might want to do- make sure you can take withdrawals on a regular basis from your 401k. My 401k that is associated with a place I used to work( I left the money there since they had a self-directed PCRA account set-up) will not allow you to take partial withdrawals. You take all of your money and none of it. I was not prepared for that so am in the process of getting the money out of it and to a different account. A little more information up front would have deflected a large amount of momentary stress!
Dec 8, 2013 11:49PM
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Someone mentioned that his or her company "required" investment in company stock.  Show this to your employer, from the Society of Human Resource Management:  " (those kinds of) restrictions have been a source of litigation when businesses have declined to the point of insolvency and the plan’s rules required continued investment in company stock. To address these cases, in 2006 the Pension Protection Act (PPA) gave participants the right to immediately diversify their own contributions out of employer stock at any time. Moreover, after completing three years of service, participants have the right to diversify out of company stock provided as the employer’s matching or other contributions, and beneficiaries have the right to diversify out of company stock after the participant dies."

There have been so many absolutely inane comments on this thread--it is scary how uninformed people are about the rules concerning retirement plans.  For Heaven's sake, people; talk to a financial advisor!  And, by the way, Reagan wasn't the reason pension plans became out-of-favor.  Companies no longer wanted the liability of promising employees a lifetime of income during retirement, cheap overseas products made the carrying costs of defined-benefit pension plans too high to keep prices competitive, and to try keeping such expensive retirement benefits in place will result in Detroit-type bankruptcies. 
Mar 10, 2014 8:26PM
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The secret to saving in a 401k? - SAVE. If you are unsure of plans, etc. and don't/won't ask for advice, just chose the lowest cost option for an index fund. But you have to save to begin with. Ignore it if you have to, but don't over-react to markets problems and ups and downs.  Save as much as you can - and keep saving.
Nov 9, 2013 10:59AM
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Obamaville isn't going to let you retire.  It will tax the income that you are no longer earning.
Nov 9, 2013 12:30PM
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you will never have enough be content. One good health problem or lawsuit you'll be a beggar.
Dec 7, 2013 2:26PM
Nov 9, 2013 12:19PM
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 Nothing but musical chairs! When the fed  stops it's welfare program for wall street it still wont stop the massive withdraw of the baby boomers. Safe to say under obozo the socialist clown the fed must continue to inflate wall street and the government will continue it's comedy of shame not counting the true unemployed that consist of the lowest labor participation rate since 1978. Yay democrats you produced a wonderful recovery that is made of welfare for wall street and shameful discounting of the unemployed Americans. And you the lucky working? Well you owe 123,000$ per working American for the Obozo national debt. This is how democrats take care of you the drooling stupid moron democrat voter. Now eat your propaganda and blame the rich or oil or just white males if you wish. Hope for change yes you can blah blah murder your babies just dont use a gun blah blah we need more Mexicans to join the lowest labor force since 78 blah blah. Stop Tax incentives for oil exploration that helps create the Current OIL boom no no more tax money to the democrat kick back funding scam called green energy blah blah yay democrats.
Nov 9, 2013 11:17AM
Nov 6, 2013 11:15AM
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As i don't know of any commen laborer that is aloud to put in 50% of his pay check into 401k , it must be people that make big money that could even afford to do so. And by the way, one of my investments was government retirement. And the rest i picked at the time did not lose either. But all in all did not amount to any of the prices of cars, and homes of today. In my life, you could not win. I use to be able to pay cash for some of these things if by saving. Try it now ! That is, the commen laborer. Also i have an on going small pention, of which Reagan came along and put a stop to pention plans as it use to be. So i lost two thirds of 30 year plan by one year short. So one has to live these things to know what always comes up.
Nov 5, 2013 9:57AM
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This is why 4901k's are a bad idea. You have to practically be in the "market business" to be able to navigate a plan. You need hours to compare plans, do the analysis, and figure projections. All of which is basically guess work. Jump on the coaster and hold on!
Nov 5, 2013 8:27AM
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One has to make good money in the first place to do any good, as usual. Most places will not let you save over 15% of your pay for 401k. And even if one could afford that much. Then 15 years or more that money would not buy you any more then it would have if you not saved at all. And that is the way it has been going for the past 35 years.
Nov 5, 2013 8:31AM
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