Make the Most of Your Retirement Plan

08/16/2022 Written by: Jenny Boudreau

There was a time when it was common for people to work for one company during most of their career. As a benefit, companies would offer retiree medical benefits and pensions to help long-time employees enjoy a more financially secure retirement. Today these benefits are less common, and the responsibility for future planning has shifted more to the individual.

Employer-based plans are an effective way to save for your future. There are many ways to make the most of your employer-sponsored retirement plan. The Department of Labor suggests:

  • Study your employee handbook and talk to your benefits administrator to see what plan is offered and what its rules are. Read the summary plan description for specifics. Plans must follow federal law, but they can still vary widely in contribution limitations, investment options, employer matches, and other features.
  • Join as soon as you become eligible.
  • Put in the maximum amount allowed.
  • If you can’t afford the maximum, try to contribute enough to maximize any employer matching funds. This is free money!
  • Study carefully the menu of investment choices. Some plans offer only a few choices, others may offer hundreds. The more you know about the choices, investing, and your investment goals, the more likely you will choose wisely.
  • Many companies match employee contributions with stock instead of cash. Financial experts often recommend that you don’t let your account get overloaded with company stock, particularly if the account makes up most of your retirement nest egg. Too much of a single stock increases risk.
  • Plan fees and expenses reduce the amount of retirement benefits you ultimately receive from plans where you direct the investments. It’s in your interest to learn as much as you can about your plan’s administrative fees, investment fees, and service fees. Read the plan documents carefully.

If your employer offers a retirement plan, such as a 401(k), take efforts to make it work for you. And if your employer offers a matching contribution, try to contribute enough to receive the entire match. The value of your account depends on how much is invested, how long the account is active, and how well the investments perform over time.

The most important thing is getting started. Whether you’re 22 or 52, you can take steps toward a better, more secure future. Keep these tips in mind:

  • Even saving small amounts can make a difference given enough time, smart investment choices, and tax-favored vehicles.
  • Automate your savings.
  • Make savings a habit.
  • Be realistic about investment returns.
  • If you change jobs, consider keeping your money in your former employer’s plan or roll it into your new employer’s plan or an Individual Retirement Account (IRA).
  • Don’t dip in your retirement savings.

Retirement may be the most considerable expense you’ll have. When finances and investing feel overwhelming, you may benefit from the help of a financial professional. Contact AssuredPartners Investment Advisors to learn how our advisors can help guide you through your options with an experienced and objective perspective.

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