A Word About 401(k) Retirement Plans

While I was at the NAD Conference in San Antonio recently, I have been approached by many conventioneers on their financial concerns. I would like to focus on one issue I believe may be of importance to you.

This article is about employees whose companies provide 401(k) retirement plans.

The 401(k) plan has three basic advantages:

1. Saving – automatic payroll deduction and tax deferral make your retirement saving plan easy and attractive.

Weekly or bi-weekly deduction from your paycheck is painless and you may not notice it for years and years. Also, when your wage is increased, you can increase the contribution to your 401(k) plan based on same percentage.

2. Investing – compound interest and dollar-cost averaging make even small investments grow big over time. Start early and it will compound faster over years and years, especially on the tax-deferred plan.

3. Ownership – all contributions and vested employer matching funds are portable. If you change jobs, move to other city or retire, you take the money with you.

You do not have to feel you are forced to stay with one company because of the retirement plan, which counts the number of years you work with the company.

You may keep your 401(k) plans apart or can combine into one plan, subject to each company’s policy.

The bottom line is that whenever you have the job, even at your young age, start early, invest regularly and DON’T ever stop.

So, as the first step in life, you can build your financial security with your 401(k) plan.

This information is not intended to replace the advice of a qualified financial adviser.

Before making any decision regarding opening or continuing contributing the 401(k) with your company, consult with the appropriate professional adviser.