The 401(k) has long been regarded as the standard when it comes to planning for retirement. However as Nicole Mayer AIF® CDFA™ of RPG- Life Transition Specialists points out, there are costly mistakes to avoid when stashing away your savings.

“From failing to take advantage of matched contributions to hidden fees that add up, there is more to a 401(k) than saving money,” notes Mayer.

Four 401(k) Mistakes

Nicole Mayer AIF® CDFA™ of RPG- Life Transition Specialist shares her tips for making the most of your retirement savings below:

  1. Failing to Consider an IRA: Leaving money in a former employer’s 401(k) could add up to thousands of dollars in administrative fees over the long-term. Shifting the savings to an IRA will not only provide a diversified range of investment funds, it is less expensive than those that are actively managed.
  2. Forgetting to Pay Yourself First: On the other hand, if the current employer offers to match 401(k) contributions of up to a certain sum, it would be a mistake to not leverage that benefit. Most employers will match a percentage of your contributions into their employee’s accounts.
  3. Becoming Too Conservative Too Soon: As retirement approaches, 401(k) investors may be tempted to reduce their risk by limiting their plan’s stock exposure. “Many investors fail to account for the fact that they will live another 25 years or more,” says Mayer. “They will either need to alter their lifestyle or grow their portfolio.”
  4. Passively Monitoring Activity: Rebalancing a 401(k) on an annual and/or semi-annual basis is a must. Actively managing how savings are divided will prevent funds from becoming one-sided, which could spell trouble for when it is time to withdraw money.

About RPG-Life Transition Specialists (RPG)

Located in Riverwoods, Illinois, RPG-Life Transition Specialists (RPG) is a financial planning firm committed to tailoring the retirement process for each individual client and providing financial education programs for corporations.