4 Smartmoneybro Tips For Your Retirement Account
Retirement will be here before you know it, and you want to be sure your money that you've invested, is well taken care of. Start your retirement early, read and understand your investment options, and ask questions.
Here are 4 quick tips to remember.
1. Don't max out your retirement account at your job. I'm not saying don't contribute. Any time you have a pre-taxed account, please contribute. So yes, please contribute. But you don't have to completely contribute the entire max amount. You need to take advantage of the company match, which is free money. Never pass up free money, however, by contributing all the way up to the maximum amount allowed, you are tying up a lot of your money for too long. Remember, you can't touch the money you contribute to your company retirement account, without a serious early withdrawal penalty, for a very long time. You should seriously consider only contributing up to the company match, and invest the rest in a more liquid asset class that doesn't carry early withdrawal penalties, such as good growth stock mutual funds, and index funds.
2. Be sure to check the investment options in your jobs retirement plan. Proper allocation is extremely important for strategic long term growth. Don't get caught being too conservative, or worse, unaware of how your money is distributed inside your jobs retirement plan! You need to check the investments that your companies retirement is invested in as soon as possible and re-allocate as necessary. If you are in your 20's and 30's, you can afford to be a little more risky, while getting the higher returns. Sometimes people are investing in their retirement plan at an early age, as if they were in their 50's. You don't have to be super conservative here. Do your homework!!
3. Never borrow money from your retirement account. NEVER!
4. Whenever you leave your current job, have your balance TRANSFERRED to your new job. Do not allow your current company to cut you a check. You will pay up to 40% of the money you've been saving for years, directly to the government, in early withdrawal fees. That is a killer. Be 100% sure your money is "TRANSFERRED", also known as a "rollover".