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<b>Your 401(k) Plan: Are You Prepared for Retirement?</b>

Your 401(k) Plan: Are You Prepared for Retirement?


As if the thought of aging isn’t already scary for some, there’s the daunting reality that sets in when you know you’re not well prepared to face retirement. When that time comes, many retirees have no choice but to scale back their lifestyle in order to make ends meet.

Others are forced back into the workplace when they should be reaping the rewards (ahem, relaxation!) of many years of hard work.

Your Ideal Retirement Is Within Reach

One of the best ways to prepare for the future may be to participate in your employer’s 401(k) plan. If you, like so many other Americans, aren’t using a 401(k) plan to your advantage, it’s worth your time to weigh the benefits against other retirement savings and investment options.


There are three key benefits to consider:

Tax Benefits 

Did you know that 401(k) contributions are tax-deferred? This doesn’t mean that this money is tax-free, but it does mean that you get to defer tax due on your contributions until you’re ready to take distributions. Not only are your contributions tax-deferred, but so is any growth on your investment.

Because your 401(k) contributions are taken before taxes, your gross income is reduced, reducing your taxable income today. When tax is finally due upon taking distributions in retirement, it may be at a time when you fall into a lower tax bracket!

Employer Contributions

Perhaps the most valuable benefit of any 401(k) plan is employer matching. When offered, your employer will match contributions up to a certain percentage of your annual salary – a figure that typically falls in the 2 – 7% range.

Under such circumstances, there’s no reason not to take full advantage of your 401(k) plan. You’re earning free money! You should be looking to contribute at least as much as your employer is willing to match. Depending on the fund, you may look to invest even more money than your employer can match. After all, 401(k) plans have much higher annual contribution limits than many other retirement planning options.

Saving Made Simple

Saving requires discipline and patience. Do you struggle to put money aside for later in life?

If so, you’re not alone. But there’s still hope: the best time to start saving is now. But a 401(k) is not your typical savings account. It’s a retirement plan, and it’s not easy to access 401(k) funds without incurring heavy early withdrawal penalties. This plays to your advantage, however. You have few options other than to simply sit back and watch your money grow!

Now, what should you do?

Have a clear vision for what you want your retirement to look like.

Every retirement scenario is unique. Some retirees only want the simple life, while others want all of the bells and whistles. There’s no wrong way to retire. But it’s important to have clear goals so that you can plan accordingly. Your retirement lifestyle should determine the vehicles you use to save and invest during your working years.

Ask your employer about the 401(k) plan.

If your employer offers a 401(k) plan, you likely received that paperwork back at the beginning of your employment. But it’s never too late to inquire and determine whether a 401(k) plan can be beneficial for you. There are a number of questions you’ll need answered:

  • Am I eligible to participate?
  • Is there employer matching?
  • What is the maximum amount matched?
  • What investment options do I have?

Determine whether a 401(k) plan will meet your needs.

A 401(k) plan isn’t for everyone. The benefits largely depend on your employer, age, annual contributions, risk tolerance, and your priorities in retirement. You might not want a tax burden later in life!

Don’t forget your wallet at your last job! 

This is important! If you have already participated in a 401(k) plan and choose to leave that employer at any point, you can perform a rollover and have those funds transferred into an IRA (Individual Retirement Account). This is an important option that many overlook.

Is a Rollover right for you?



While education will go a long way in preparing you for the future, it’s best to jump on a quick phone call so we can discuss your specific needs.

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