Ep 31: 5 401(k) Tips for the End of the Year

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As the year winds down, we help our clients with a checklist of items to get them prepared for the new year. One very important area to take a close look at is your 401(k) contributions. What can you do to improve your retirement account next year? Today we’ll share five tips to help you get the most out of your 401(k).

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Show Notes

Retirees today will rely on their 401(k) and other retirement accounts more than anyone did before them and that’s why it’s essential that you’re doing all you can to save money.

On this episode of the podcast, we’re going to provide you with five 401(k) tips that you can check off before the end of the year. We want to help you get the new year started on the right foot and these tips will help with that.

Tip 1: Max out your 401(k) contributions. If you’re under the age of 50, the max you can put into your 401(k) is $19,500. Once you’re over the age of 50, you can take advantage of the catch-up contributions by putting a total of up to $26,000 into your 401(k). As we reach the end of the year, check with your company and find out where you stand. You can use those last few checks to make sure you’ve maxed out.

Tip 2: Make sure you’re getting the full employer match. If you’re unable to put in the full amount to your 401(k) during the year, the minimum you should be doing is contributing enough to take advantage of the employer match that’s offered. Every company is different so you’ll need to look at your specific plan to find out how much you have to put in. But passing on this is essentially turning down free money.

Tip 3: Can you up your contribution percentage? Now that you’re approaching the end of the year, let’s evaluate your income and savings amount and determine whether you can increase the amount you’re contributing next year. Maybe you’ve gotten or a raise or there’s just some extra money that can be applied. Whatever you can do now to increase your savings will really help you down the road.

Tip 4: Understanding where you’re making contributions. What we mean by this is do you have a Roth 401(k) option in your company account? Does it make more sense to contribute more to that Roth option or the traditional 401(k)? These are things you should be reviewing with your financial advisor before the end of the year so you can make the appropriate changes for the new year.

Tip 5: Now is a great time to assess your investment mix. We find sometimes that people are doing a great job putting money into their 401(k) but they aren’t picking investments to fuel their long-term growth. This doesn’t mean looking only at safe investments versus growth. Instead, take a deeper look at the diversification in your portfolio.

If you have any questions or want us to take a look at your contributions and investments, please get in touch and we’ll be happy to sit down with you.

Also, check out the two articles Scott discussed in this episode:

DIY Estate Planning Mistakes

Retirees Protect Yourself from Online Thieves

Listen to the full podcast or use the timestamps below to jump to a specific section.

[1:16] DIY Estate Planning

[8:01] Tip 1: Max out your 401(k)

[10:37]Tip 2: Make sure you’re getting employer match

[14:11] Tip 3: Can you up your contribution percentage?

[15:12] Tip 4: Understanding where you’re making contributions to

[18:28] Tip 5: Now is a great time to assess your investment mix

[23:34] Article review: protecting yourself from thieves online

Thanks for checking out this episode. We’ll talk to you again soon.

“Now is a great time to go through that review and then maybe make some changes to where your contributions are going to go to.”

-Scott Sierens

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