Take care of your 401(k). Now!

Take care of your 401(k). Now!

Not many people have a solid plan when it comes to retirement. This applies to people of all ages. It doesn’t matter if you are young or old, naive or experienced, when it comes to retirement savings plans, most people always seem to  fall short.

Here are three tips to help you save for your retirement.

Move out of your house

A big difference between the current generation saving for retirement and the previous generation is debt. Those trying to boost their 401(k) savings are adding to their debt. Over 60% of households are piling on           debt much faster than they are saving for retirement.The majority of debt is made up of mortgages. The total monthly payments made by new homeowners are on the rise. Homeowners are currently paying 21%                   more than what homeowners were paying a year ago. So, it makes sense to relocate. Getting out of an expensive house and into a lower-cost one will help you cut home-related costs while still maintaining a similar                 standard of living.

Try alternative investments

Investing means exposing yourself to a certain degree of risk, and the simplest way to protect yourself is to diversify. Alternative investment options such as trusts or partnerships provide steady, stable benefits. Although, there aren’t too many of these investment options, it is a good bet to invest anywhere between 10% to 20% in these options. The small percentage is mainly because of the risks involved in investing too heavily in these options. Markets usually do better than the more exotic alternative investment options. However, when it comes to investments, it is always beneficial to hedge your bets.

Invest in ETFs

ETFs and ETPs have grown in popularity hitting a high of $2.3 trillion last year. The low fees and the relatively good returns have also helped their popularity immensely. ETFs require very little management. They follow popular indices meaning that, once the product is up and running, it pretty much runs by itself. This translates to lower fees. Despite all of this, only a shade over 3 million households invest in them. That’s probably due to the fact that many retirement plan sponsors do not offer ETFs or ETPs as options. For all of you who haven’t yet gotten into the ETF game, the best solution would be to request your employers to allow employees to avail of these options. Ask your company’s CFO to provide you with other options besides mutual funds. Although, it is not advisable, you can take matters into your own hands and invest in ETFs. If you plan to do so, first take your plan to an IRA and then proceed to take it to another  investment firm; thereby, managing it yourself.

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