Posts Tagged ‘401k’
What To Do With Your Money When You Retire
The inevitable truth is none of us are getting any younger and so you need to prepare for your golden years whether you like it or not. Most of us are busy working, raising families, partying, studying and enjoying life and so planning for 30 to 50 years from now may not be the first thing we think about. However it is something you should be doing at a very young age because it is much harder to plan and save as you get older.
One of the best ways to save for your retirement is by investing in your company’s 401k plan. A 401k plan was formulated by our government to help Americans prepare for their retirement years. The plan allows you the opportunity to invest your money, tax deferred and using compound interest, so by the time you reach retirement you have a nice chunk of money available to you so you can still thrive. However, not everyone will stay with the same employer forever and so the nice thing about the 401k plan is that you can rollover to a new plan should you find a new employer, or you can transfer it to an individual retirement account.
Once you are ready for retirement you then need to consider what options you have with all of that money. This is your retirement after all and so you want to make sure that your money is working for you in the best way possible. (A lot of folks now are moving from volatile stocks to steady investment property.) It is the key to you having a comfortable and happy retirement life. You have a few options to choose from:
You can invest your income into an annuity. Essentially you choose a company to handle your money. You give them a lump sum and they will give you a certain amount of your money each month. Kind of like getting a paycheck from an employer. There are a few things to consider with this option though. If you do not live to see the last dime of this money, whatever money is left over the company does not have to give this to your family members. However, should you live longer than expected this company will have to continue paying you so essentially you may end up with more money than you gave them. It is a gamble.
Another option to invest your money and put it to work during retirement is by buying property. This is something that needs to be well thought out because should you buy a piece of property that does not increase in value you could certainly lose money on it. You can always flip houses or find renters that will pay more than what your mortgage is worth. You should talk to a Realtor as well as a financial advisor to get an understanding of the current market.
Whatever you choose it is important to research your options. You can invest in a variety of different ways to make you retirement money work for you, but you don’t want to take action haphazardly Educate yourself and make smart decisions.
Protect Your Money With A 401k Rollover
If you are saving money for retirement, then why would you let even a penny of it goes to waste? Sadly, this is what happens to many people who do not bother to learn enough about how to rollover their 401k to their new employer.
If you are changing jobs, then you need to rollover your funds or else you will lose them. Doing a 401k rollover is not that difficult of a process when you consider the implications of not doing a rollover. What you need to do is ask your current employer what your options are in this area. Sometimes you are only going to be able to rollover the portion of money that you placed into the fund yourself. The employer does not want to give away the money that they have contributed to your fund (if they did put some money in there).
Another thing you are going to need to look into is if the 401k from your current employer will roll over exactly into their 401k offerings. Two companies may not have the exact same 401k offerings, but there are usually something similar that can match up well. If you have investing a portion of your money from your 401k into your company’s stock, then you may need to sell off that stock to get the full benefits of that money. Obviously you will not be able to roll over an individual stock like that into your new company. Therefore, you should probably not buy as much of your company’s individual stock in your 401k in case you ever have to roll it over. It just makes everything a little bit more difficult for you.
You should always roll over your 401k any time you change jobs, because this is your retirement money and you have worked hard for it.