401k Investing and Planning For Retirement
It wasn't so long ago that if you had a job working for a company, you were pretty much guaranteed to receive a company pension.
That is one of the reasons why so many people stayed at the same company for their whole working lives, the promise of receiving a nice fat company pension on the day they retired.
In the old days, employees didn't even need to contribute to the company pension themselves, they were safe in the knowledge that their employer would look after them in their retirement, just as they did during their working life.
However, all of that has now changed.
Companies no longer take care of the complete funding of retirement plans, they expect the employees to make a contribution too.
But with this change has come increased flexibility and choice in how, as an employee, your pension funds are invested.
The main pension fund investment vehicle in the US is now the 401k.
401k investment funds take the responsibility away from the employer and pass it back to the employee, for both paying funds into the plan and for deciding how those funds should be invested.
Certainly, many employers do still contribute to an individual's 401k, but there is no longer any legal requirement for them to do so.
Given the recent economic climate, less and less companies are actually making any significant contribution to their employee's pension funds.
So with the responsibility laying at your own doorstep, it it is important for you to make the right decisions when it comes to 401k investing.
Decisions such as how much of your monthly salary you want to invest (remember that there is an annual upper limit of $15,000).
If you invest too much, you might find that you want to withdraw funds before the age of 59, which means you will be heavily penalized by the taxman.
You will also want to make the right decisions about which stocks to invest in.
The key thing is to aim for stable, growth stocks, because don't forget that you are investing for your retirement here, not playing the stock market! If you are not sure about any of this, it is always good idea to seek professional advice from a financial adviser.
There are many such advisers about, so try to find one recommended by a trusted friend or colleague.
Do all of this right, and you should enjoy a happy and comfortable retirement!
That is one of the reasons why so many people stayed at the same company for their whole working lives, the promise of receiving a nice fat company pension on the day they retired.
In the old days, employees didn't even need to contribute to the company pension themselves, they were safe in the knowledge that their employer would look after them in their retirement, just as they did during their working life.
However, all of that has now changed.
Companies no longer take care of the complete funding of retirement plans, they expect the employees to make a contribution too.
But with this change has come increased flexibility and choice in how, as an employee, your pension funds are invested.
The main pension fund investment vehicle in the US is now the 401k.
401k investment funds take the responsibility away from the employer and pass it back to the employee, for both paying funds into the plan and for deciding how those funds should be invested.
Certainly, many employers do still contribute to an individual's 401k, but there is no longer any legal requirement for them to do so.
Given the recent economic climate, less and less companies are actually making any significant contribution to their employee's pension funds.
So with the responsibility laying at your own doorstep, it it is important for you to make the right decisions when it comes to 401k investing.
Decisions such as how much of your monthly salary you want to invest (remember that there is an annual upper limit of $15,000).
If you invest too much, you might find that you want to withdraw funds before the age of 59, which means you will be heavily penalized by the taxman.
You will also want to make the right decisions about which stocks to invest in.
The key thing is to aim for stable, growth stocks, because don't forget that you are investing for your retirement here, not playing the stock market! If you are not sure about any of this, it is always good idea to seek professional advice from a financial adviser.
There are many such advisers about, so try to find one recommended by a trusted friend or colleague.
Do all of this right, and you should enjoy a happy and comfortable retirement!
