Your 401(k) is a great way to help build retirement savings. But how can you take full advantage of your plan?
First, contribute as much as you can afford each year. At a minimum, put in enough to earn your employer’s matching contribution, if one is offered.
Also, consider the Roth 401(k) option, if one is available. You won’t get an immediate tax break, as you would with a traditional 401(k), but withdrawals of your earnings and contributions will generally be tax-free. Consult with your tax advisor to determine the right 401(k) version for you.
Whichever 401(k) you choose, though, make sure the investment mix is appropriate for your goals and risk tolerance.
Early in your career, you may want to invest more aggressively, but as you approach retirement, you might consider moving toward a more conservative portfolio.
One more suggestion: Try to avoid borrowing from your 401(k) or taking early withdrawals – you may incur taxes and penalties and have less money available for retirement.
Following these moves can help you ensure your 401(k) will be a key contributor to your retirement income.
This content was provided by Edward Jones for use by Daniel Pellerin, your Edward Jones financial advisor at 189 East Main Street Suite G, in Newport, (802) 334-6261.