abcInvesting Blogs

June 1, 2010

How Does Your 401k Compare?

Curious how your company's 401k plan compares to others? The federal government's Bureau of Labor Statistics has an article explaining the most common features of plans and how many companies offer such features.

Although the article is interesting, it doesn't make much difference to most workers, who cannot change the plan even if they wanted to. Someone who is weighing two different job offers might want to know about the 401k plan, but my experience is that salary, job responsibilities, and opportunity for advancement are a lot more important than the details of the 401k plan.

What should you do if the data show that your company offers a not-so-great 401k plan? First, if there's a matching contribution, then participate in the plan whether you like the other details or not. Free money is too good to pass up.

Second, if there's no match and you want to set aside more than $5,000 a year, then the 401k is a good choice.

Third, if you want to save less than $5,000 a year, then an IRA (either regular or Roth) works pretty well. You'll have more decisions to make than with a 401k, but the wide range of choices means that with a little homework, you can have a great retirement plan. If you go this route, be sure to set up an automatic payment into your IRA. The IRA company can help you do this. One of the great features of the 401k is that the money goes straight into an investment, so you don't need great discipline to invest for your retirement.

We have more information about contributions to your 401k at our on-line lessons, The ABCs of Your 401k.

May 20, 2010

Easier to Sell Company Stock in Your 401k

New regulations make it easier for you to sell company stock within your 401k. For more information about the new regs, see this article. I am not a fan of company stock in your 401k. I prefer to see you more diversified, focusing on investments across different types of assets (stocks and bonds, ... Read More >

April 14, 2010

401k Plans' Investment Allocation: Too Conservative in the Rebound

A new report on 401k plans shows that assets rebounded in 2009, though they are still below the levels of 2007. Even more worrisome, after 2007 the participants (workers) shifted to more conservative investments. As a result, they missed the jump in the stock market we've had recently.
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March 24, 2010

Postponing Retirement Because of Your 401k Account?

Some business leaders expect that their employees will postpone retirement because of the declines their 401k accounts suffered in late 2007 and 2008. New research casts doubts on that, but we'd like to know what you are thinking. Please post a comment if you have--or have not--changed your ... Read More >