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One of the most important benefits of investing in a 401k plan at work is the potential for your employer to match a certain percentage of your contribution. Many 401k allow employers to contribute to the particpant’s account, but not all. The amount is usually represented as a specific percentage of the your contribution to the plan. For example, if your employer has a 50% match then for each dollar you contribute your employer would contribute $0.50 to your account.

If you take that example and draw the amount in your account over 20 years with and without a match you will see the huge diiference between the two. If you put in $100 at the end of each month into your 401k and your employer matched 50% the growth over 20 years (1980-2000) would almost be $240,000. Whereas it would be almost $160,000 if there was not employer match.

So take advantage of your employer’s match and put in as much as you can because it is free money and the growth of that money will help you towards your retirement.

Company-sponsored 401k plans can be very beneficial to your retirement. The following are some advantages to participating in your company’s 401k plan.

1. Participant Control:

• You get to decide how much you will invest each pay period up to the IRS’s annual limit
• You get to choose how to invest your money
• The assets in your 401k plan belong to you, so you take your vested accumulated plan assets with you if you leave the company

2. Pre-tax Investing:

• The funds you contribute to your 401k plan is deducted from your paycheck before income taxes are considered. This will allow you to reduce the amount of taxes you pay

3. Tax Deferral:

• You owe no taxes on the 401k investments until you withdrawal it from the plan.

4. Tailored Investment Plan:

• You can customize your plan to meet your needs according to your age, time horizon, wealth objectives, and risk tolerance

Investing during retirement is different than investing for retirement. When you retire your investment objectives change to generating income and have enough money to live the rest of your life.

Some things to consider:

· How much can I safely withdraw?

· How can I make my retirement money last until death?

· How do I handle inflation?

· How do I transfer money to my heirs efficiently?

Some potential problem issues to consider:

· Fixed dollar withdrawal programs increase your risk and becomes a serious problem if a market decline.

· You might live until your 90s or older; how can you be ready for that financially?

· Inflation will never completely disappear so expect it.

· Taxes are a retiree’s worst problem for returns.

· You have to be prepared to watch your spending carefully.

· At age 70 ½ you must deplete your retirement accounts: how do you handle the influx of money?

If you plan accordingly, you will feel safer about your retirement. With no plan you can lose control of the situation during retirement because there are some many factors that there is no way to control. There is no comprehensive plan to follow; you must assess your situation individually so consider these factors and more when investing during your retirement.