Saving for Retirement in a 401(k)? 3 Costly Mistakes You Could Be Making.
Written by Maurie Backman for The Motley Fool -> Not snagging your workplace match is a shame. Investing too conservatively could stunt your returns. When it comes to saving for retirement, there's perhaps no easier tool to use than the 401(k). With a 401(k), your contribution
When it comes to saving for retirement, there's perhaps no easier tool to use than the 401(k). With a 401(k), your contributions are deducted from your paychecks automatically.
That means you won't be tempted to spend the money you're supposed to be socking away for retirement on other things. Rather, that money will disappear from your net pay before you get a chance to use it elsewhere.
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But if you're going to save for retirement in a 401(k), it's important to do so strategically. And that means avoiding these mistakes.
If your employer offers a 401(k) match, consider it a real gift. Granted, it's a gift that probably comes with a catch -- you have to contribute money out of your own paycheck to get that free cash. But it's worth doing.
Not only can your employer contributions boost your 401(k) balance immediately, but you can also invest those matching dollars for added growth.
You may be hesitant to invest your entire 401(k) in the stock market. And that's understandable. But if you invest too little of it in stocks, you could end up with sluggish returns that leave you with a smaller balance over time.
Consider this: A $500 monthly 401(k) contribution invested at a yearly 8% return, which is a bit below the stock market's average, could result in a balance of about $680,000 after 30 years. A more conservative 6% return leaves you with just $474,000, all other things being equal.
