13 ways to increase your 401k. If you're looking to catch up or get ahead on saving for retirement, there are steps you can take to do that.
Click ahead for 13 tips that can help you boost contributions to your 401(k).
Related: 12 Secret Moves to Double Your 401(k)
Start Saving Early
"This so-called 'paradox of choice' occurs when too many choices cause people to delay decisions," he said. "In reality, it's better to just start saving with no undue emphasis on investing. Time heals all poor investment decisions, so the earlier you start saving, the less critical investment performance will become."
One option, especially for younger 401(k) participants who have few or no outside investments, is a target date fund. A target fund works like this: A 22-year-old teacher today who's planning to retire at age 66 might invest in a target date 2060 fund. As time goes on, a portfolio manager rebalances the fund so it becomes more conservative -- with fewer equities and more fixed income -- as the teacher moves closer to the target date retirement date of 2060. This can be a good first step for younger participants toward owning an instantly diversified portfolio.
Read: 42 Ways to Save for Retirement
Commit a Percentage of Your Income
"In other words, if a person saves 10 percent of his $50,000 salary, he's saving $5,000 annually," he said. "As he gets raises, his savings automatically increase instead of him having to remember to raise his contributions by a fixed dollar amount -- which most folks won't remember to do."
Pretend Bonuses Never Happened
Take Advantage of Auto-Escalation
"For example, if you started with a 3 percent contribution rate and set up an automatic contribution increase of 2 percent every six months, you would be up to an 11 percent contribution in two years -- and you would barely even notice it," she said.
Reduce Your 401k Investment Costs
"Funds with low expense ratios tend to outperform funds with higher expense ratios," said Mike Piper, CPA, author of "Microeconomics Made Simple" and owner of ObliviousInvestor.com. "It often makes sense to pick the lowest-cost fund in each of the categories you want to use in your 401(k) -- as opposed to, for instance, picking based on past performance."
Monitor Your Account
"There are no 'set it and forget it' investment options," said CPF Eric McClain of McClainLovejoy.com. "Monitor what's going on in your account. Occasionally, you'll see folks who never opted into their 401(k)s, went with the default investment option and never changed it or are failing to save enough to receive the match. Avoid these mistakes."
Keep Your Portfolio Balanced
Some plans have an auto-rebalance feature that allows participants to set their accounts to rebalance at regular intervals. Ideally, you would do this every quarter. If you do it more frequently, you'll likely be trading too much.
Get Your Full 401k Company Match
If you can't afford that amount right now, do what you can, but strive to increase your contributions. The contribution limit for 2017 is $18,000. For those 50 or older, the maximum contribution is $24,000 -- this group can add $6,000 in "catch-up" contributions.
Don’t Shy Away From Risk
Nobody likes to lose money, but your account can't grow if you don't assume some risk. As with any type of investment account, invest according to your financial plan, your age and risk tolerance.
Don’t Cash Out When You Switch Jobs
Meanwhile, any money you take out immediately loses its opportunity for growth. If you have a small amount saved, however, you can transfer -- or roll over -- your 401(k) to a plan offered by your new employer or into an individual retirement account.
Read: What to Do With Your 401(k) When Leaving a Job
Consider a Roth 401(k)
Like their IRA counterparts, Roth 401(k)s are built with pretaxed money instead of deferred tax savings. When it comes time to retire, you can access your money tax-free, no matter what your bracket. You can also tap a Roth 401(k) for certain things like medical expenses without incurring the tax penalty that would come with a traditional 401(k).
Don’t Borrow to Buy a House
If you need to borrow from your retirement plan to buy a house, you're likely buying too much house -- and the dangers don't end there. If you lose your job or change jobs, you'll likely have to repay it all within 60 to 90 days. This kind of reckless borrowing can compromise your future wealth -- and leave you with nothing left over for repairs and other hou
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