Seven Easy Ways to Boost Your 401(k)

Sadly, 401(k)  plans may not be the best vehicle to guarantee us a secure retirement that will last through the years. Too many variable factors - the market's performance, the timing of  our retirement, the cost of our plan, our asset allocation and so on - can influence whether we're able to save the sobering amount financial planners say we'll need.

By the looks of it, we're in deep trouble. Financial advisers say we need to have saved eight to 11 times our salary by the time we retire to afford a similar lifestyle.  But a Fidelity Investments analysis of 401(k) plans for workers 50-plus tells a different story. Those of us nearing retirement, ages 55 to 59, have saved an average of $134,600. And workers right at retirement's doorstep, ages 60 to 64,  and 65 to 69, only saved on average $133,100 and $136,800, respectively.

Fidelity says these averages at the end of 2012 are record highs for 401(k) plans.

Saving enough to live comfortably in retirement seems daunting, but there are steps you can take to maximize your success:

• Save enough to get your full company match. For 2013, workers can save a maximum $23,000 - $17,500 in regular contributions plus $5,500 in catch-up contributions for those 50-plus.
• Understand the importance of diversifying your assets based on your age and years to retirement, as well as the cost of plan fees. If your plan is taking too much from your savings, ask your employer to consider other plan sponsors with more competitive fees.
• Utilize retirement tools to help you plan and calculate your retirement readiness rather than guess at what you'll need.
• Stay at your workplace until you're vested in your company's plan.
• Don't cash out of your 401(k) if you leave your job to take another. Roll over the 401(k) or leave it at your former employer if that's allowed. If you cash out, you'll incur the pain of taxes and penalties.
• Don't take a loan from your 401(k) no matter how tempting. You'll be taxed twice for the privilege. First, you'll be paying yourself back on an after-tax basis. Then when you retire and take distributions, you'll be paying taxes again on those funds.
• Delay retirement so you can continue to sock money into your plan without having to take money out of it.

Photo credit: Jasleen Kaur via flickr.com

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