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3 Steps for Fixing a Broken Retirement Plan
12/7/2009 1:00:00 PM
SAN DIEGO (ETFguide.com) - These are trying times for America's 401(k) savers. The average 401(k) balance for a participant in their 60's, according to Hewitt Associates, is around $93,000. That's barely enough to last some people a few years.
On top of that, companies have cut or eliminated matching contributions.
'For too many Americans, 401(k) plans have become little more than a high stakes crap shoot,' stated House Education and Labor Committee Chairman George Miller. 'We are realizing that Wall Street's guarantees of predictable benefits and peace of mind throughout retirement was nothing more than a hallow promise.'
What can you do to fix your retirement plan?
Stop Overdosing on Company Stock!
Instead of reducing their financial risk to individual stocks, new evidence shows that 401(k) investors have gone absolutely mad out of their minds. In January 2009, Hewitt Associates reported, that millions of 401(k) participants put more money into company stock than in any other single retirement plan option, including conservative bond funds. No wonder so many retirement plans have been roasted beyond recognition! People are repeating their mistakes by overdosing on company stock. How much more money will they need to lose before they stop?
Don't Leave Your Money Behind
Alert 401(k) investors have taken the decisive step of rolling over their retirement money into a traditional IRA account. This allows them to avoid IRS tax penalties associated with pre-mature retirement distributions. It also allows them to control their retirement future and to invest in other effective investment options, like low cost index ETFs.
Diversify Beyond your 401(k) Plan
True diversification begins with broad market exposure to major asset classes, not just stocks and bonds. Unfortunately, the product structure of mutual funds does not accommodate assets like gold or commodities. In contrast, these key areas can be reached in a cost effective manner, via exchange-traded funds (ETFs). Isn't it time that 401(k) plans start offering ETFs as a main investment option? What are lawmakers and third party admistrators (TPAs) waiting for?
If you're stuck in a 401(k) plan with inadequate investment choices, high fee funds, no matching employercontributions and a deadbeat boss that doesn't care, it's time to fight back! It may be time you consider investing outside of your 401(k) plan. Consider 401(k) alternatives like traditional IRAs and Roth IRAs. The latter will allow you the financial flexibility of investing in low cost ETFs that give your retirement portfolio better investment choices.
Don't be confused, startled or distracted by the madness of the
financial markets. Reaching your financial goals with the least
amount of cost, taxes, and risk can be achieved!