Adjusting Your 401K

The majority of people with a retirement plan at work haven’t bothered to pop the hood and look around. Let that sink in for a moment. Everyone worries about saving enough for retirement yet very few take the initiative to fine tune this bad boy.

An unnamed person at my job asked me to help lower her monthly contribution to her 401K. At first I was pleased to help and agreed a 2% drop would be a good move given the slowing of the global economy but then we dove deeper. Their reasoning was to increase their take home pay instead of the ol’ retirement funds. Once the contribution rate was changed I asked to see which funds were selected for each monthly contribution. One!

Most people don’t realize there are a variety of funds to choose from and could vary. Some funds cover specific sectors or groups. Other funds may focus on emerging markets such as third world development. (Possibility for large returns in nations who are improving their economies) Her entire retirement is based on one fund. For her age it isn’t even the correct one. I believe it was a fund designated for folks drawing retirement in the 2020 decade. She asked what she could do without upping the retirement contributions or changing anything in her settings. I said, “nothing. Just work until you’re 80 or so.” 💁🏻‍♂️

Each 401K, whether it be setup through Vanguard, Fidelity, Schwab or any other investment vehicle, have options you can select in order to tailor them to your specific risk levels. More on risk levels down the road. If you haven’t logged into your employer or personal retirement plan in a while you need to. Feed your curiosity by signing in and staring blankly at the screen for a while. Look for funds you’re purchasing by default and put in a little work by looking at funds or stocks you could be investing in instead.

When you’ve selected a fund which looks enticing dig deeper! 😲 You’ll be able to check on historical pricing and performance as well as fancy ass charts which paint a better picture as to how your retirement account could look down the road. Once you’ve settled on a handful of favorites you can go back in and change your settings!

I can’t suggest the exact figures to allocate your dollars, that is a decision specific to each person planning on retiring one day. Some 401K restrict you on which funds you can select. Some allow any stock symbol you could think of while others limit your choices to 10 to 15 “safe” funds.

Make up your own minds on how or when to invest after doing some proper research. Personally, I’ve lowered my contribution rates to a nice 4%. I don’t expect the momentum in the markets to continue on an upward trend. Most news outlets keep pointing out how high the prices of stocks are going up while hinting at a slowdown with the global economy. The world is overdue for a correction (when the market drops drastically) and if this election year is anything like the Meme lords hope it’ll be the confidence in the market will most likely drop. I could be wrong but playing it safe for a period of time won’t erase my retirement.

If I’m right in my speculation and buy back in after the drop then the profits will be pleasing. 🤑 I intend to raise my contribution rates for the 401K back up to 15% and load up the funds at a discount. Would you rather pay $100 or $60 for the same share?

Happy trading and learn as much as you can while you’re young. Your retired self will thank you!

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