In today’s video we are discussing the top 401(k) mistakes that holders make and give you some tips on how to fix them.

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Top 401k mistakes
Auto enrollment into the default investment. (TDF) – By default, when you begin a new 401(k) plan, you will be auto-enrolled into a Target-Date fund based on your age. It sounds easy. The TDF will automatically adjust to less risk as you near retirement. But studies have shown that target-date funds aren’t all they are cracked up to be. They sometimes have greater fees, and don’t perform as well as other investment options inside your 401(k).

Not maximizing the match. Many don’t contribute up to the company match. This is a huge mistake. If your company is contributing an equal amount to let’s say 3% of your pay, if you contribute the same, you are getting a 100% return on your money

Not paying attention to (or even forgetting) old 401(k) plans. This is more common than you think. Millions of 401(k) plans are left behind each year. When these plans are left behind, you don’t keep up with changes to the plan, or you just totally forget about them.

Switching jobs before fully vested. With the great resignation still in full swing, many are switching jobs mid-year, or mid vesting schedules.

Cashing out when switching jobs. This is so common, especially with smaller accounts. Why? Automatically, 401k plan providers will cash out your old 401(k) and send you a check, if the balance is below $5k. And, what happens when you receive this “mailbox money”? We spend it, and never put it back into our retirement savings.

Not opening your statements. Statements are intimidating to many of us. So intimidating that we don’t even open them!

Taking early withdrawals. Many feel that they can just withdraw from their 401(k) when the need arises. The problem with this is that you short your retirement, must pay taxes on the money withdrawn, and may have to pay IRS penalties if under age 59 ½.

Not increasing contributions. How many of us don’t plan to slowly increase our contributions each year, as we pay raises or year-end bonuses? This can be a big mistake by limiting your retirement savings in the future.
Not getting professional help. Many workers today do not have access to an advisor to help them with their 401(k) plan or understand their plan enough to go at it alone. That’s ok. These plans are intimidating and can be complicated.

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