Should i enroll in 401k

Skip to main content. Benefits at work, Retirement August 1, Share: Email this to a friend 3 Reasons to Contribute to a k Please fill out all required fields.

Your name. Your email address. Send to. Message optional. Thank you for sharing Your message has been sent. When you finally pay taxes on your k , it may be at a lower rate Your k savings is tax-deferred, not tax-free — you will be taxed on the amounts you withdraw in retirement.

Get articles like this delivered directly to your inbox. Sign up. Related articles. Key questions for planning your retirement. Additional articles. Again, it depends on your goals and your situation. Target-risk funds aim for a specific risk level. They might be aggressive, conservative, or moderate. The more aggressive they are, the more stock and overseas stock they hold.

Conservative funds typically hold less stock and less-aggressive stocks, allocating more to bonds and cash. Again, to reach the desired risk level, these funds might own somewhere around 10 to 30 different underlying funds or hundreds of individual stocks and bonds.

Target date funds use the same approach, but they add a twist: They can reduce risk over time. These funds typically have a year in the fund name such as the fund , and that year helps you understand how much risk the fund takes.

If the year is just a few years out, the fund would presumably have less risk — but most target date funds keep you invested in stocks even after your retirement date to attempt to combat inflation. These funds make it extremely easy to diversify, but they might not be built the way you want. The next step is to choose who should receive assets in the event of your death. Override the will: Be aware that your beneficiary designation overrules your will.

Whatever you write on a valid beneficiary form can happen before anybody reads the will. If your will says that Susie gets the money, but your beneficiary form says that Julie gets the money, Julie gets it because the assets can skip going to your estate or probate. Make sure everything looks the way you want it to. There are several potential outcomes. In some cases, your retirement plan assigns a default beneficiary.

This is often a surviving spouse or next of kin, and that might not be what you want. Confirm how things work before you decide not to submit a form. In other cases, the funds simply go to your estate. At that point, they may be distributed according to the instructions in your will, or according to state law. Kids: Parents often want to name their children as beneficiaries.

That makes sense, but minors are not allowed to own most types of financial accounts. There are ways to make arrangements before your death and improve the chances of things working the way you want. Talk with an estate planning attorney or do more research before you submit your beneficiary form.

Going forward, you can make changes to things if you want. Remember, this is a long-term investment, not a game. Verify contributions: Check your next few paychecks to ensure that the funds are being taken from your pay, and log in to your k account to verify that the money arrives in your account. In rare cases, employers miss something and in even more rare cases, they hold on to your money , so a quick checkup is always wise.

You should receive official Fee Disclosure documents at enrollment, and annually. The more money you have invested, the more important this becomes. Save more: Almost nobody has too much money in retirement. Try to increase your contribution — even by a little — every year or more often if you want. You should only change your investments when that change fits with the long-term plan. Let time work for you and avoid costly mistakes. Update your plan: Things change. Are you using the right investments for your needs?

Before you decide investing is not for you, consider the alternatives. Things like shelter, crops, and radioactive protective gear might be more important. How are you going to build up enough money to reach financial independence? Look at your options, think long term to the extent possible , and do what you can to manage all of the risks you face — not just the ones they talk about on the news. Leaving that money on the table is a little like turning down a bonus or a raise.

The IRS sets a limit on the amount an employee can contribute each year to a traditional k. It usually makes sense to contribute at least enough to your k to get the maximum matching contribution from your employer. The money you contribute to your k plan is yours to keep from day one, but the contributions your employer makes may be subject to a vesting schedule.

Most k plans offer target-date funds an investment mix based on the year you expect to retire as an option for participants. But that convenience may come at a cost. Especially if your k is your only retirement account. Ask your plan administrator about all your options. You can always change your investment choices to better suit your goals or your personal tolerance for risk.

Here are some basics:. You can ask your HR department or your plan administrator for information about your k , but the decision making will be left to you. Todd Schick is the president and financial adviser at Aspire Wealth Management www. The appearances in Kiplinger were obtained through a PR program.

The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger. Kiplinger was not compensated in any way. The Best T. Rowe Price Funds for k Retirement Savers.