You depend on your 401(k) savings for the financial security of being able to live out your retirement years comfortably. Your retirement is too important to your financial security to leave to chance. The recent market volatility may have you looking for ways to maximize your 401(k) savings. Here are some ideas that may help.
Aggressive retirement saving
If you’re lucky, your employer matches your 401(k) contributions. Don’t rely on that employer contribution to think you are investing all that you should be. Many investment advisors recommend saving a minimum of 10% of your earnings for retirement. If you have other retirement accounts besides your 401 (k), you can diversify the 10% over the different accounts. Make sure that you are at least investing enough to capitalize on the matching employer contributions. Many employers will match all or half of your contributions up to 3% to 6% of your earnings.
Review your allocations
You should review your allocations at least once every quarter to see which investments are gaining and losing. Without a proper review, you’ll miss stocks that could be losing your money, especially in down marketing. You could also miss opportunities to invest in other stocks that are experiencing growth.
Catch up contributions
Once you reach 50, the IRS will allow you to add $6,500 each year to your 401(k) for catch up contributions. You can also add $1,000 annually to your IRA. You should begin doing this as soon as you turn 50. For 2020, you’ll be able to contribute up to $19,500 in a 401(k) and $6,000 to an IRA.
Seek professional advice
Investment advisors are trained to help you develop a strategy for maximizing your retirement savings. You shouldn’t take chances and rely on your own financial knowledge when it comes to something as important as retirement savings. An advisor can tell you the best strategy for maximizing your 401(k) savings.