Welcome back to another Thinking on Thursday topic. As I continue my research on topics related to retiring and elder years, this one came up a lot, and of course, is one I and lots of others can relate to. A scam is probably not completely accurate, but many people do not truly understand their 401K and actually end up losing a lot of their earnings long before they retire.
Most places don’t even offer a 401K option to their employees, and if they do you probably have to work full time to participate. I really am not sure I understand why because my research shows all of the burdens is on the investor, that’s you, not the company offering it to their employee. So, right off the bat, I call BS. At the end of last year, I pulled out of having any more money taken from my check and put into my 401k. Why?
For several reasons.
- I did not see any stability in the company I was working for and figured the would be rolling over the business to another healthcare managing company in a couple of years, just like the many previous ones before them. Rolling over a 401k is a pain, and I can’t cash it in without huge penalties, and I wasn’t vested so it didn’t even matter. Most companies don’t have you vested until at least 5 years working for that company. The new job I am starting at next week is 6 years to be vested.
- I have about 10 years to retirement, and while they can put my money into less risky portfolios, not all of them are set up that way. I really do not know enough about investing to take any kind of high risk with my money.
- The fees these companies charge are ridiculous.
If you don’t know about these things and your 401K I suggest that you learn about them. I urge you to watch the video below and if you do have a 401K start looking into what amount of fees you are paying, where your money is actually invested in, etc.
Index funds may be a much safer place to invest your hard-earned money. They have way less risk and are easy to manage so the fees are nominal at best. Read more about index funds here, and there is a short video that he ranked as the top 5, after the longer video. I do not know that they will make you rich, his title is his title.
I am not an investing coach or money coach. I am a health coach, and retirement issues are a huge part of health.