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Avoid Common Mistakes When it Comes to Your 401(k) Plan

Investing in a 401(k) plan is a necessity these days. You need to ensure
that you have a retirement plan in place so that you’re not struggling
and trying to scramble to pay for basic needs like food, housing, and
transportation. Surprisingly, however, many Americans are without a
retirement plan and a 401(k). Don’t be a statistic — take action for
your future.


1). Not participating in your employer’s 401(k) plan. You definitely
need to take advantage of this program if your employer offers it.
Having a small percentage of your salary earmarked and automatically
taken out of your paycheck is more non-threatening than having to
actually sign a check and send it in. Having a plan through your
employer is easy. Once you sign-up, you don’t have to think about how
you’re going to save up for your retirement.

2). Not taking advantage of employer matching program. This is free
money and it’s ridiculous to ignore this popular option. If you
contribute 5% of your paycheck every pay period to your 401(k) plan,
your employer may match it up to 50%. Some employers may even offer a
100% match, adding 2.5% more into your 401(k) plan.

3). Forgetting about your plan. This is something you need to review
at least every month. Know what’s going on with your money. Make sure
that your specified deposits are being made and that no suspicious
activity is going on. It would be tragic if you went about your routine
for three years and then finally checked-in on your retirement plan,
only to discover that your account was not being credited properly.

4). Relying only on the company’s stock as funding source. If your
company has a 401(k) plan that has different investment options, take
advantage of it. You need to diversify your allocations and wisely make
investment choices. Putting all your eggs in one basket could be

5). Tapping into your 401(k). Your 401(k) should not be touched. This
is money that you are working hard to put away so you can retire and
enjoy the fruits of your labor. If you withdraw money from this account,
you can be hit with steep penalties and you can eventually squander
your savings and not have anything left over.

6). Underfunding your account. It’s not impossible to put more money
into your 401(k). Instead of thinking of it as a monthly contribution,
break it down into weekly increments. Try to eek out another $5 every
week, which will amount to an extra $25 every month. $10 every week will
net you $40 every month, and that’s an extra $480 into your 401(k).

Retirement is a stage of life you should be eagerly planning for now.
If you haven’t started a 401(k) plan yet, it’s never too late. The more
money you start investing now, the more money you will have in the
future. If you have any problems or questions, ask your company’s 401(k)
representative or a financial adviser.

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