Year-end Planning Tips 7/10 - Open Enrollment - 401(k) Deferrals

While all the talk right now is about Open Enrollment for Health insurance, healthcare flexible spending and Medicare we cannot forget about our 401(K) deferrals.   Most of us feel overwhelmed by the prospect of retiring.   Most have not done a proper “needs analysis” and therefore the amount needed for retirement is just an unqualified guess.  For those at the beginning of their careers it might seem impossible to think about what your needs might be at the end of your career but it is this generation that is blessed with the gift of time and can take full advantage of the growth opportunities.

If you are 50 years of age and above there are provisions for you to make up for lost time by making an additional catch-up contribution of $5,500 over and above the $17,500 deferral amount.  Traditional IRAs and Roth IRA also have a catch-up of $1,000 and this above the $5,500 annual contribution amount.  One should not be intimidated into contributing the full amount.  You should only contribute what you can afford but neither should you stinge your future needs either. Before you have children there is greater flexibility to put away more but one will need to review one’s situation once the family starts growing. 

Whether you are investing in your 401(k) or IRA, diversification as in every part of your income earnings or preservation of wealth is important to your portfolio.  The Department of Labor -Employee Benefits Security Administration has a guide that is useful for those not in a position to afford the services of Financial Planner.  Either way this is all too important to leave to chance and the links below should provide some guidance. 

Most employer sponsored plans to provide the services of an investment professional that can give you general guidance on your investment choices but this is usually geared to only retirement assets in that particular plan and will not include the other aspects of your life.

Savings Fitness: A GUIDE TO YOUR MONEY AND FINANCIAL FUTURE

Taking the Mystery Out of Retirement Planning