We have all been on trips before. Whether they are business trips or personal ones, before you go there are always certain things you have to do to prepare for it. If it’s a business trip, your decisions are rather limited. But if you are traveling for personal reasons, you have to think about where to go, how to get there, what to bring and what to do once you get there. And you wouldn’t dream of going on any kind of trip without packing for it or mapping it out, would you? Well planning for your retirement is no different from planning for a trip.

Just like with traveling, retiring without planning for it would create issues, and who wants that? If you want to retire comfortably and not look back you will need to do certain things before you say bye-bye to your job. Part of your planning process will revolve around two main decisions. One, you will need know what you plan on doing during your retirement years. Two, how much money you will need to do it.

We cannot help you decide what to do in retirement, but we can help you on the financial side. The more financially prepared you are the smoother your retirement years will be. We will show you ways to improve your 401k investing, some of the options for your 401k investment funds and some 401k distribution strategies that you should find helpful. There are many things to do in preparation for your retirement, let’s get started.

Winning 401k Investing and Distribution Strategies

3 Tips To Help You Retire On Your Own Terms

Tip #1 – Investing For Your Future

  • Invest as much as you possibly, possibly can during your working years, you can never invest too much
    • Maximize your 401k contributions every single year
    • If your employer matches your contributions, you are getting free money…therefore, the more you contribute, the more they match
  • The 401k standard contribution limits are adjusted every year or even every other year to adjust for inflation
    • The 401k contribution limit for 2016 is the same as it was for 2015, which is $ 18,000
    • If you are over age 50 you can also contribute an extra $6,000, this is called the catch-up contribution
    • So for 2016, you can invest up to $24,000 into your 401k plan
  • Your 401k investment money compounds and grows every single year that you have it invested, you cannot lose by maxing out your contributions
  • Before you retire, you are saving on taxes since your contributions are tax deferred until you make withdrawals
  • The more money you save before you retire, the easier retirement will be

Tip #2 – Hiring A Good Financial Team Can Only Be A Plus401k

  • Hire a team of advisers that you trust
    • The first member of the team is a financial adviser
  • Use the adviser for guidance with financial decisions
  • Bounce your financial ideas off the adviser
  • It will help to share your thoughts with a financial professional
  • Be sure the adviser has your best interests in mind at all times
    • The second member of your team is an attorney
  • Use the attorney for estate planning, will preparation and possibly a trust
    • The third member of your team is an accountant for tax advice
  • You could use tax advice before, during and after you retire
  • It is a good financial move to have a trusted financial adviser, attorney and accountant before you need them

Tip #3 – Think About Your 401k Distributions

  • Plan ahead on your 401k distributions
  • Be very careful on when you take any 4o1k distribution
    • The IRS will penalize and tax you if you take an early distribution
    • The IRS considers most distributions taken before age 59 1/2 to be an early distribution
  • Everyone’s financial situation is a little bit different
    • You can take a lump sum or schedule installment payments
    • Your tax situation will help determine whether a lump sum or regular payments will be more advantageous for you
  • Work with your accountant to review the tax advantages of your distribution options
  • If you take a lump sum, you can roll that money into an IRA account
    • Do you have an IRA account? If not, do you have a financial firm or bank to work with?
    • Work with your bank or financial firm to set up all appropriate accounts
  • At retirement you can take your money out of your employer’s 401k plan or leave it there until you decide how you want to invest it (if your employer will allow that)
    • If you invest your 401k funds in an income annuity, you will create a guaranteed steady stream of income
    • Having a guaranteed income stream can be comforting
  • It is always best to review all of your options with a financial adviser before jumping into any investment product
  • And play it safe, never invest in anything that you do not understand

Your Retirement Years

Retirement sounds so relaxing and carefree, and it can be. But only if you are financially prepared for it, otherwise, your retirement years will be hectic and chaotic; and who wants that? Who wants to retire with financial burdens and worries. Being prepared for a trip makes the trip run a lot smoother and somewhat stress-free. Being prepared for retirement will make your retirement less stressful. You’ve worked hard, you look forward to a stress-free retirement.

Your retirement years could be as long as your working years. Nowadays people are in retirement for twenty to thirty years. That is a very long time. You will need to do a lot of planning for such a long time period because you will need to finance those twenty to thirty years of retirement. No one will finance your retirement for you. No one cares about your retirement as much as you do.

It is never too early to start preparing for retirement. The absolute best time to start is when you start your first job (even though retirement is a long, long, long way off). The second best time to start was yesterday. And you got it, the third best time to start is right now. Retirement planning just takes a little effort on your part with a few simple steps. Invest as much as you possibly can afford to as early in your career as you can. Have your employer set up the automatic contributions to your 401k and you will quickly learn to live without that money. And it is never to early to get to know your team of trusted advisers; financial advisers, attorneys and accountants, so start interviewing and hiring them. It will be your retirement and no one cares about your retirement as much as you do.