On The Agenda:

We get a lot of questions about 401Ks, so we thought it would be a good idea to address as many of them as we can. See if your 401k question is addressed on today’s show.

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Episode Show Notes:

On this episode of How Money Works, we’re sharing answers to some common 401k questions.

My company plan is to offer a program where I can get advice on my 401k for a very low fee. Is it a good idea to use this?

Ask yourself: what are they doing? Inside of 401ks, there are a lot of rules. Most of the time the investment advice you’re going to get is institutionally driven.

As an advisor, they’ll ask you some questions about risk and return expectations. They’ll tell you you’re conservative, moderate or aggressive. There’s nothing wrong with that approach, but inside of a 401k you basically have a bunch of offensive team players.

Their advice is better than nothing, but there’s no thought to, “What do I do when …?”

Should I contribute as much as I can to my 401k or only as much as the company will match?

At a minimum, you should hit the match. If not, you’re leaving money on the table. If your employer wants to give you 4% or 6% of your salary, take it. More companies are offering Roth 401k plans, which grow tax-free.

The biggest and hardest question we’ll ask you if you come to see us is what is the income that you’re going to want when you quit work? That will help you determine how much you’ll need to invest in retirement.

Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.

Important Points:

1:22 – Advice from company plan

4:21 – Max out 401k?

7:12 – Target date funds

9:12 – 401k loan


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