You’re Contributing To Your 401(K), Now What?
With the eradication of pension plans for the majority of Americans, contributing to an employer-based retirement plan is important now more than ever. Especially if there is a company match available, no one should leave free money on the table. But what about your other financial goals? If you’re contributing to your 401(k) and ready to invest for the future, here’s how you can get started.
Make a list of things you’re saving for, rank them in order of priority then put a dollar value on each. Do you want to travel the world, pay for your children’s education, or start a side business? With an idea of your goals, priorities, and the related costs, you can better assess the options available to help you get there.
For parents, being able to help your kids pay for college may be a non-negotiable, however retirement savings should continue to come first. Only after you are saving enough percentage wise to build a sizeable retirement account that will ensure a steady stream of income should you add college savings as a priority. If you decide to open a 529 account consider letting friends and family members contribute as well, as an alternative to birthday or holiday gifts. Unsure as to how much you need for a secure retirement? Try this retirement calculator from TIAA or speak with a financial adviser.
Want to build an investment portfolio to help pay for that dream trip to Fiji five years from now, but have no experience investing outside of your 401(k)? Start by doing your research. Sean Wilson, director, Integrated Product Solutions at TIAA shares “financial service providers and financial-focused news sites provide information that individuals can use to learn more about investing.” This will help you become familiar with terms such as stock, bond, mutual fund, index fund, and ETF, as well as what steps you need to take to meet your financial goals. “Individuals are better equipped to meet with a financial adviser if they come prepared with more specific, personalized questions about investing. Make sure you also have a sound understanding of the fees, taxes, and penalties associated with each option.”
Lastly if you have a hobby or talent you love and think you can capitalize on, consider socking some cash away to set up shop. Whether online through a sales platform or your own website you can find a market for almost any creative product. Having a lump sum of cash set aside for supplies and inventory will take that hobby to side hustle in no time.