Recently, the Financial Industry Regulatory Authority (FINRA) released tips to help individuals automatically save for retirement. It is important to make sure that you are in a position to save for life after work. There are a number of programs offered by employers that can help individuals save up for retirement such as 401(k), 403(b), pension plans, and more.
FINRA’s tips included the following:
Make sure you know your default savings rate, escalation rate, and investment selection. Your 401(k) plan may have acceptable defaults. You can change the automatic defaults if you are not happy with the employer choice.
Ask if your employer matches your contributions. Some employers match the amount you contribute to your retirement after you reach a certain percentage. For instance, if you contribute $100 of each paycheck, depending on the percentage, your employer may match and it would mean $200 towards your retirement.
As long as you are capable, take advantage of escalation. It could be a small annual increase to help your savings in the long run. Your plan may offer automatic escalation.
Pay close attention to your account statements. It’s your money, you should have a great understanding of what’s going on with it. Don’t just put the statements to the side. Open them, read them, and ask questions if you don’t understand.
Don’t cash out your retirement savings at any time. If you do, you can lose out on the opportunity for employer match and you may face tax penalties. This is meant to be available to you when you are done working and retire.
Your retirement savings are important. Make sure you fully understand what benefits you have, if your employer matches, and if you have automatic escalation or defaults. If you need help regarding your retirement, be sure to ask questions.
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