Wednesday, March 4, 2009

Ways to Rescue Your 401(k)

by Mei Ling Lin

How does the tough economic affect your retirement plans? Almost every person got “hurt” in the difficultly economy, such as loss job, or loss income or get big loss in the 401(k). Therefore people said, “(they) don’t want to see (their) 401(k),” or someone just give up checking their 401(k). However, you don’t want to give up any opportunity to continue contributing to your 401(k). The following suggestions may help you to contributing to your 401(k).
1. Know your risk tolerance, if losses in your 401(k) are causing you to lose sleep, you may be taking on too much risk for your investment personality.
2. Don’t overload on company stock, because hold big percentage of company stock in 401(k) would take a big hit. Try to allocate your investment in various baskets.
3. Adjust your investment mix over time, you need to periodically evaluate and adjust the investment mix in your 401(k).
4. Don’t cash out, the worst thing you could do to your retirement is cash in your 401(k) - a move that would level your finances come tax time, extend your pre-retirement career by a number of years, and/or reduce your income when you start retirement.
5. Cut cost and reduce savings withdrawals, try to reduce their investment costs, and you may also want to consider their life expectancy, and plan accordingly when it comes to withdrawals and investments
6. Balance and rebalance, if you don’t have the time or knowledge to actively manage your plan’s holdings, 401(k) plans have asset-allocation models designed to assess a participant’s risk tolerance, manage that risk and maximize returns by setting a percentage for each category of assets.
7. Delay retirement - It’s a Marathon, Not a Foot Race. The more you invest when markets are down, the quicker you will recover the losses you sustained over the past two years.

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