The Friday after Labor Day is a day to think “401(k)”. Or “403(b)” or “457” or “profit-sharing plan”. The Profit Sharing/401(k) Council of America (PSCA) has created 401(k) Day to help employees across the country appreciate (and use) this fantastic retirement savings tool.
Are you taking control? The reason for 401(k) Day is that so many retirement savings plans go underutilized. This is amazing, considering that a 401(k) may be the best vehicle an employee will ever have to save money for retirement.
It’s like your employer is giving you a gift. No law requires a business to have a 401(k) or profit-sharing plan. Your employer sponsors that plan, at an expense, for your benefit. A 401(k) is an opportunity your employer gives you to make financial strides. This is a great way to save and plan to build wealth, a little at a time, by deferring small amounts of salary into investment accounts of your choice.
When people don’t do it, it is often because of misconception or perceived inconvenience. No one wants to take an hour to meet with “the 401(k) guy.” But they don’t understand how easy this all is â€“ sometimes it takes less than an hour to get a participant into a 401(k) plan, and in that hour or less, the decision you make on behalf of your financial future may end up helping you for a lifetime.
If you work for a public school district or a government agency, then you respectively have a 403(b) or 457 plan to accumulate retirement savings â€“ the non-profit versions of the 401(k) plan.
Keep the 401(k) top of mind. This year’s 401(k) Day is appealing to three workplace populations that should be using their 401(k) (but sometimes don’t). One, people in their early twenties â€¦ people with the longest time horizon until retirement and the greatest potential for their savings to compound. Two, mid-career workers who need to find an “autopilot” way to amass a retirement nest egg as they juggle mortgage, college and family expenses. Three, baby boomers needing to ramp up retirement savings levels.
Whether you’re 25, 35, 45 or 55, you should be participating in your employer-sponsored retirement plan. If you aren’t, you are seriously thwarting your retirement savings potential. Unless you are somehow independently wealthy, it is foolish to dismiss the potential of your 401(k) â€“ and you do so at your own risk.
Remember, you’re in control when you use your 401(k)! Are you using yours? Make sure you are. Any day can be 401(k) Day. Hopefully, September 5 will awaken those haven’t participated to do so.
If you have a 401(k), having a financial advisor is also a good move â€“ one that may give you a nice level of insight and guidance when it comes to financial decisions. If you’re serious about getting ahead financially and retiring with a greater degree of financial freedom, then talk to a qualified financial advisor today.
Robert Klosterman, CFP® is Founder of White Oaks Wealth Advisors, Inc., a fee-only wealth management firm, and its predecessor R.J. Klosterman & Co, Inc. Bob has been a Certified Financial Planner licensee since 1989. He has a clear vision for the future having worked in financial planning since 1975, and feels a strong need to provide people with expert and independent wealth advisory services. As a Certified Financial Planner and certificate holder for Family Wealth Advising, Bob’s expertise and guidance have helped to fuel the steady growth of the firm. Today, White Oaks Wealth Advisors boasts a talented staff of advisory professionals, hand-picked for their financial planning and wealth management knowledge as well as their dedication to client service.