Did you know that around 50% of Americans struggle financially with their retirement? This is partly due to having no information about effective 401k strategies.
According to the Social Security Administration, half of the married retirees depend on social security checks for 50% of their income, and this statistic is higher in unmarried retirees (70%).1
Where could they have gone so wrong, and how can you secure your retirement savings? As a public employee, you have job security, but you should also take steps to ensure that your financial future is not compromised.
Use These 401k Strategies in 2021
Don’t Miss Out on Your Employer’s Match
Yes, increasing your 401k contributions may seem like a huge financial burden, but you will be glad you did when you retire. Most public employees end up contributing too little that they miss out on their employer’s match.
This is free money that you’re missing out on! By failing to secure that match, your overall compensation is considerably lower. Start by cutting down on expenses that you don’t really need and channel the extra money to your 401k.
Audit Your Contributions Regularly
When was the last time you increased your contributions? Chances are, you’ve been saving the same amount you did when you opened a 401k account. Start auditing your contributions every year!
You should ideally save about 15%-20% of your annual income for retirement so that you can easily keep up with your living standards then.2
While this may seem a bit ambitious, you don’t have to do it all at once, and this figure also includes your employer’s match. Start by increasing your contributions at a 1% annual rate until you hit your target.
Don’t Cash Out Or Borrow Against Your Plan
Keep your hands off the cookie jar! This is not your emergency fund, neither is it your backup plan during employment; it’s a safety net for your future. The worst part about borrowing from your 401k is that you’ll incur interest fees, and you’ll probably have to halt your contributions until you fully repay the loan.
Cashing out your fund, on the other hand, is worse because you get charged a 10% penalty for early withdrawal and taxes. Don’t waste away your golden years by mishandling your plan.
Don’t Hold On to the Default Fund Choice
The default fund choice may be the safest option, but it also has the least returns. Set aside time and create an allocation plan to help you spread out your fund over various asset categories.
401K Strategies for 2021 to Maximize Your Returns
Think about your retirement for a while; will you have to change your living standards? Will you have to depend on your relatives? Your 401k plan is your safety net, and you should start implementing strategies that will help you maximize your returns.
If you’re thinking of turning your home into a retirement asset, talk to one of our expert advisors about the CalPATH Home Loan Program and how you can use your mortgage to increase your savings.
“About Mountain West Financial and the CalPATH Home Loan Program
Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.
You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm). A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.
We look forward to working with you soon!
Sincerely, Joe Moore – Branch Manager”
Links of external links
- Studies Confirm That Half Of Americans Struggle With Retirement https://www.forbes.com/sites/advisor/2020/10/06/studies-confirm-that-half-of-americans-struggle-with-retirement/?sh=575781136f9f
- How much should I save for retirement? https://www.fidelity.com/viewpoints/retirement/how-much-money-should-I-save