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Managing Employer Retirement Accounts

Maximize Your Retirement Savings by Taking Advantage of All The Options

It's no secret that the majority of retirement savings comes from your employer. Between the money you make and save, your 401k contributions, 401k employer matches and your company's pension fund, there are many ways to fund your retirement through your employer. For any of these retirement plans to be successful, you need to manage them properly. Here are some simple steps that you should follow to help you make the right decisions.

Your success will ultimately depend on managing your investments to maximize the amount of money you invest and to maximize the return on your investment. Let's look at each of these separately.

Maximize the Amount of Money You Invest in Your Retirement Account

This concept is pretty simple.  Save and invest as much money as you can through your employer's retirement plan options.  If your employer offers a pension or 401k, make sure you enroll and take advantage of any matches or financial help your employer offers.  Many companies offer pensions that are fully funded by the employer.  This is like free money.  Other companies offer employee funded pensions that are usually subsidized.  This is also a great investment if it is subsidized.  Do your research and learn about pensions so that you can make better choices. And remember, any money that your employer will put in your retirement account or help fund toward your retirement earnings is the same as free money.  The same is true for 401ks, which are usually matched by your employer.

Here are some other ways to maximize your retirement savings:

  • Make it automatic.  Setup your accounts to automatically withdraw as much money as you can from your paycheck each month.  If you never see the money then you can't decide to spend it instead of invest it.  Pretend you don't have the money and you can learn to live on the rest of your take home pay.
  • Take advantage of matching.  Many employers will match investments into your 401k or employee stock purchase account.  Don't ever turn this benefit down.
  • Enroll in any stock plans and profit sharing.  Some employees turn these plans down because they require them to buy stock that they don't know much about.  Teach yourself about these plans and learn to take advantage of the long term saving options that they provide.
  • Increase your salary.  Every raise and bonus that you get should be invested into your retirement accounts.  The more money you make the more you can invest, so find ways to create value at your company and try to get rewarded with higher pay.
  • Don't limit yourself to your employer's plans.  If your can save more money by also investing in an IRA or even a personal stock account for retirement, don't hesitate.  Many people don't think about saving outside of their employer's accounts and neglect this opportunity.

Maximize the Return on Your Retirement Account

Besides maximizing the amount you invest, it is just as important to maximize the return you get.  Here are some ways to manage your employer retirement accounts for such returns:

  • Use tax benefits.  Most employers offer tax benefit accounts that either reduce your tax burden now or during retirement.  401ks and Roth 401ks are included in these types of options.  Reducing taxes is the same as earning money so make sure you study your choices and take advantage of these types of accounts.
  • Minimize fees.  Paying fees to manage your accounts is one of the quickest ways to fall behind in your retirement savings.  Find accounts, funds and investments that have low fees.  If your 401k has high fees, consider transfering it to an online broker with lower fees (yes, you can do that) and more options.
  • Get the best investment options.  Maximizing your returns often means having access to the best investment choices.  If your employer offers poor investment choices consider transfering your money to a low cost online broker that has lower fees and nearly unlimited investment choices.
  • Clean up your old employer accounts.  If you have money sitting in old employers and are being charged fees, have bad choices, or lack online access, you should roll your old accounts to your current employer or to a discount broker so that you can help maximize your choices and returns.

Managing your employer retirement accounts properly, paying close attention to your options, and learning about your choices can often lead to meeting your retirement goals much earlier.  Do your homework and stay on top of your accounts to give you the best chance.