Saving for retirement is important for all ages, the key is to start early.
Land a great new job? Awesome. Now is the perfect time to think about your 401(k) and retirement plans, whether you had one before or not. Saving for retirement is important at all ages; do not let this opportunity fall to the bottom of your list.
Here are four tips to consider when starting a new job and a new 401(k).
- Make more contributions if you have a bigger paycheck. When you get a raise, it is a good idea to increase the amount you contribute to your 401(k). You did not have this money in your pocket; therefore you do not miss it when you put it straight into your 401(k).
Ask your financial expert what the contribution limits are, if you already meet the limit, and whether you should consider contributing to an individual retirement account (IRA) for even more retirement savings.
- Do not pass up the new employer’s match.
Sometimes, employers provide a 401(k) match as part of their employee benefits package. They may match your contribution dollar for dollar or a percentage of it up to a set amount.
Your company match is free money. Do not let it slip through your fingers. If you are offered a bundle of cash — a few thousand dollars, perhaps — would you turn it down? Find out the employer match limit and at the bare minimum, contribute that amount.
- Name your beneficiaries for your new 401(k) plan. Keep your beneficiaries consistent across all retirement accounts and according to your estate plan. Be sure to update your new plan to reflect changes in your beneficiaries. Are you now a parent or do you have a new spouse? Updates allow your 401(k) account to pass directly to the person of your choice should you pass away.
- Above all, do not forget to enroll in your new plan. Many employers offer automatic enrollment in the company’s 401(k) plan. Find out whether this benefit is available at your new job. While this may seem obvious, it is easy to forget signing up for your new company’s 401(k) plan, because many employers require a short waiting period before new employees are eligible to join. If you have to wait, put a reminder in place – circle the enrollment date on your calendar and set an alarm on your smartphone. Just do not forget.
Wondering what you should do with your old 401(k) accounts?
For easier management, some may consider consolidating an old 401(k) account with a new one Research what investment options.
your new plan offers and the requirements or steps to conduct a rollover. We recommend consulting an expert to determine what is the best option for you, considering important aspects including the comparison such as comparing underlaying fees between options.
Taking your money out of an old 401(k) as a distribution might not be a good option as you will have a tax liability. Typically, keeping those dollars in a tax-free or tax-deferred account as long as possible is a good idea.
Time is key to accomplish a great retirement. The earlier you start planning, the better prepared you will be. If you would like to learn more information about different retirement strategies available to you, please send an email to our financial expert at email@example.com.
The information provided is for educational purposes and for your independent consideration. It does not contain, constitute, or provide individual tax, financial, or investment advice. Moreover, said material should not be considered as a recommendation of any particular security, strategy, or investment product or service. Investments or trading strategies should be evaluated in relation to each individual’s objectives and risk tolerance. Readers are urged to seek professional advice regarding their specific financial, legal, tax, and investment matters. Investment products are not insured by the FDIC, are not deposits or obligations of and are not guaranteed by Banco Popular de Puerto Rico or its subsidiaries or affiliates and may lose value.
Banco Popular de Puerto Rico offers numerous investment alternatives for IRA accounts. You may obtain detailed information at any of our branches to determine which investment alternative is most convenient for you.