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Always Take The Match


Only 32 percent of Americans are saving anything in a workplace retirement account.

Mistakes, I have made many, but my most glaring and recent went like this:  When I started at my employer I had to wait 6 months before I was eligible to sign up for the company sponsored 401K plan and start receiving the 4% match. Low and behold almost a full year went by before I remembered that small detail and started my contributions.

Now I am kicking my own butt over a missed 6 months!

What is more amazing to me is that millions and millions of Americans are in the same boat, for various reasons. According to one study only 32% percent of American workers are saving anything in a workplace retirement account -- a number that otherwise staggers me.

Lets say there are a few rules everyone should follow:

Rule Number 1) Always contribute at least enough to take full advantage of the company match. Sometimes these can be quite generous, and offer a pre-tax investment vehicle. The biggest benefit of this is that the amount that is going into your 401K is more than what would be going in your pocket anyways, and the portion that is matched by your employer is doubling your money!

Rule Number 2) Contribute as must as you possibly can. In 2018 you can defer up to $18,500 from your paycheck. Those age 50 and older can save up to $24,500.

Rule Number 3) Give careful consideration to your chosen investments. Many plans now offer target date funds and this might be the best choice for someone who does not want to individually choose each fund and re-balance their portfolio over time.

Rule Number 4) No monkey business! What I mean is while it is possible to "loan to yourself" out of your 401K that does not make it advisable in almost any circumstance. Not only will you be paying interest and fees (that do not GO BACK TO YOU), in many if not most cases, employers may not continue to match your contributions during the period that you are paying back the loan. Check all of the small print before making any decision regarding a loan.

Other Articles in This Series:

Get Your Best Loan Options

The Simplest Trick To Retire Wealthy

Choose Your Better Future

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.