Posted on June 01, 2006 at 16:51:02:
With company pensions disappearing all around, your own retirement savings are more important than ever. For 25 years, a popular option has been the 401(k), funded by the individual worker, usually with some input from the employer. How’s yours doing?
At least once a year, it’s smart to check your account. Is the balance between investments still what you’d planned, or have changes in fund values skewed the balance? If you find following your investments closely is difficult, consider an asset-allocation fund. How much is locked into your company stock?
Are you saving as much as you can? The 2006 limits are $15,000 and $20,000 for those 50 or older. Be sure to save enough to get the maximum match from your employer; if you’ve gotten a raise, put a higher percentage of income into the 401(k). Changing jobs? Move the 401(k) money into an IRA. If you cash it in, you’ll pay taxes and a penalty – and lose future tax-advantaged compounding.