How to Strengthen Your 401K

Have you ever been in search for tips on how to strengthen your 401K?

Well, look no further. I've got three useful tips for you that will help you bulk up that 401K and secure a better and more prosperous future for your retirement plans, and your family in the long run:

1. Make Sure You're Active From You're Young

Several people wait far too long to start saving and investing in their 401K's. The fact is, the longer you wait, the lesser the benefits that you will experience when you hit retirement.

If your employer has a 401K plan, then that means it's more than time for you to start saving with that plan right now, and to put a good sum toward it too. It's for your long-term benefit, and for the benefit of your loved ones, so my question is: what's stopping you?

2. Make Use of "Catch-Up Plans"

That's right, even if you didn't take advantage of saving with your 401K in your younger days, then there's no need to panic, because there's still hope for you, and for the prosperity of your retirement.

There are "Catch-Up Plans" which exist, wherein you'll have to take on an additional amount unto your tax payment, so that you can literally "catch-up" all the sums that you would've paid when you missed out. In my book, it's a "burden" worth taking.

3. Diversify Your Investments

It's important to keep your investment portfolio diversified, as this allows you to be able to experience benefits "from all sides", and also to have something to fall back on if the other investment fails.

Carefully selected investments from asset classes and styles, will allow you to experience the retirement benefit you desire.


So, what are your investment tips?

 

Great information. I started investing in my retirement account when I was 25 years and started off with $20 deducted from each paycheck because that was what I could afford at the time. I never missed the money and increased my contribution with each raise I got. Now I am contributing about $100 per check and plan to increase this amount again. It does not matter how much you start off with, just start somewhere and grow your contributions over time.

 

In the USA sometimes you get employer match. If this is a possibility, then you absolutely must use it, no matter what. It's basically free money, so you would be silly not to take it.

 

Thanks all!

I'm happy to hear that Rosyrain was able to invest in the 401K plan from such an early age. That's truly the ideal, and I subscribe to it myself. You really don't "miss the money", and it adds up in the long run anyway.
As for securing an employer/company that "matches your contribution", that's also a must! It really would be unwise to negate the chance to get such an employer, as it literally is "free money" that you wouldn't have gotten towards it otherwise.

I really hope that more and more people become aware of the benefits of starting off from early, and that they do see it as relevant, because I can't really think of another more solid investment that gives you rewarding returns and that doesn't involve as much risk as say, stock trading.

 

This is a good one. Starting to earn for your retirement at a young age is really an advantage. Someone told me before that saving for retirement should be started at a young age while you're still active and strong in earning money. It's never too early to start young. I have been earning for my retirement myself so I wouldn't have a hard time by the time I'm no longer that active to work.

 

I feel like you're offering two tips, not three. If you are young, then tips 1 and 3 are relevant to you, but tip two is worthless. (I don't know what the catchup rules will be like in a couple of decades when I'm old enough for them, do you?) If you are nearing retirement, 2 and 3 are relevant to you, because either you invested young or you didn't, but you can't change it now.

That said, it's all good advice for the people it applies to. As an add-on to your 3rd point, if you are overwhelmed with the concept of diversification and don't know where to start, a target date fund is a really convenient way to get a variety of sectors in one fund. It has the added benefit of changing as you age, so your portfolio is riskier when you are young enough to recover from a drop in the market and gets more conservative as you get closer to needing the money.