When it comes to saving for retirement, many people take a set-it-and forget-it approach. But not paying attention to your 401(k) and IRA accounts could cause you to miss valuable savings opportunities.
Avoid these seven mistakes:
Not contributing enough to get your full employer match. If your employer matches your contributions to your 401(k) plan, you should try to stretch enough to at least meet their maximum match amount.
Neglecting to maximize your contributions. While you may not be able save up to your 401(k) contribution limits (for most people, that’s $20,500 in 2022 plus an additional $6,500 catch-up contribution for those over age 50), you should save as much as you are able. If there’s any extra room in your budget, consider dedicating that money to retirement.
Playing it too safe by investing in an overly conservative way. If you only choose safe investments like cash or CDs, you run the risk of inflation outpacing the low returns.
Not reviewing your investment allocation regularly. Your asset allocations will inevitably need to change as you age. This means you should review your portfolio at least on an annual basis.
Not taking advantage of catch-up contribution options. Once you turn 50 years old, you have the chance to catch up a bit and your maximum annual contributions go up another $6,500 for a 401(k) and $1,000 for your IRA.
Forgetting about old retirement accounts. If you’ve changed jobs, there is a chance that you left an old 401(k) plan with your former employer’s plan provider. Of course, the money is still yours, but it may not be doing as much for you as it could if you rolled it into an account you are actively managing now.
Taking too much of a do-it-yourself approach. Managing your own retirement planning can be confusing if you do not have the knowledge and skills to make the best choices. Seeking the help or guidance of a financial professional can remove the doubt and emotion from your investment decisions and ensure you are on track for retirement.
Avoid These 401(k) and IRA Mistakes
