Tags: Retirement | retirement | 401k

4 Things You Need to Know About Your 401(k)

By    |   Saturday, 13 June 2015 01:29 PM

While a solid and well-funded 401(k) is great security for those headed into retirement, there are many caveats to how someone wisely uses and manages such a funding stream.

Experts and analysts say caution and knowledge are helpful in planning and making the most of your 401(k) investment. Here are four things to consider.

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1. How Much Do You Get Monthly
Your monthly retirement income amount is crucial, according to Forbes. How much are you set to receive each month when you retire? You should know that and plan accordingly.

“The lump sum in your 401(k) may seem like a lot, but when you translate it into a monthly income stream over 20 or 30 years, it may not be as much as you think,” Fidelity Vice President Jeanne Thompson told Forbes. “Breaking it down into how much the money will provide will give you a much better picture of how much you’ll have to spend in retirement.”

2. Be Wary of Annuities
While you might be offered the opportunity to purchase an annuity, that strategy for your 401(k) is unwise, Forbes notes, even though it could be less expensive than an IRA conversion. When you take an annuity, the money that you receive is distributed "in fixed amounts that you can't raise or lower," Forbes warned. Most retirees want flexibility in the event they have a big-ticket purchase to consider.

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3. Know Your Vested Date
If you are contributing to your company's 401(k) program, know when it becomes vested. Plan your tenure there accordingly.

"If you have worked for four years and you will get it all at the fifth year, unless there is some other major situation, try to stay around until it is totally vested," Stephen Madeyski, a certified financial planner and founder of Stephen Madeyski Financial Planning, told US News & World Report.

4. Ponder putting some 401(k) money in a Roth IRA
Analysts urge diversification, so if your company's plan allows you to put some 401(k) contributions into a Roth IRA, you should consider it.

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While a solid and well-funded 401(k) is great security for those headed into retirement, there are many caveats to how someone wisely uses and manages such a funding stream.
retirement, 401k
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2015-29-13
Saturday, 13 June 2015 01:29 PM
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