3 Biggest 401K Mistakes to Avoid

The 3 biggest 401K mistakes to make when considering a 401K are:

  1. to not participate at all,
  2. to not participate up to the point of employer matching,
  3. to invest in the wrong funds. 

401K Mistake #1 : To NOT participate at all

Don’t discount your employer’s retirement plan out of hand.

Putting your money into one is generally a good idea, especially if you’re not doing any other saving for the future.

Whether you plan to “retire” in the traditional sense, or you just want to make sure you have money in the bank when you get older, socking money away now is a smart decision, and your employer’s 401(k) can have some strong benefits. 

Some plans have a great match but bad fund selection. Others will have great funds, but no match. If your employer offers other perks for enrolling in their 401(k), by all means, take advantage of them.


401K Mistake #2: to not participate up to the point of employer matching

The matching funds are free money, so it is a very good idea to take that money off the table.

It’s free money, like we mentioned. Even if the options have high fees, some free money is better than no free money.

Look at it as free 100% return: you deposit $1000, your employer matches that $1000, you now have $2000 in your 401(k).

(Obviously, I’m keeping things simple. Vesting schedules mean that the employer match isn’t yours to keep immediately, but rather after some time; usually in chunks.)


401K Mistake #3: to invest in the wrong funds

Many 401k plans have limited selections of funds, and many of those funds are not good performers

If you did select investments when you enrolled in your 401(k), but haven’t looked at them in a while, that allocation may no longer be appropriate.

You may have taken on more risk than you intended, especially if you haven’t rebalanced your account.

There may be additional investment options with lower fees or an allocation that is a better fit for your goals.

Many employers and retirement plans offer access to model portfolios and financial advice to help you stay on top of your retirement account.

 It’s important to give your plan a checkup from time to time to make sure it’s performing as expected, and there haven’t been changes that cost you money.

Mintco Financial 401k Financial Advisors Buffalo NY and Tampa Florida

Talk to us at Mintco Financial about your particular situation.

You don’t have to be wealthy or have complicated finances to contact us!

Call us in Buffalo NY 716-565-1300

Call us in  Tampa Florida 813-964-7100

Email us and schedule a complimentary meeting at info@mintcofinancial.com