6 Ways to Boost Your 401(k) Halfway Through the Year
Now that we’re halfway through the year, are you looking for ways to boost your 401(k) savings?
Many Americans are struggling to save like they used to, and their retirement accounts are taking a hit.
According to recent data from the Commerce Department, “The personal saving rate, the share of income that Americans are squirreling away, was 3.8% in January, well below the recent peak of 5.3% last May and the roughly 7% share before the pandemic.”¹
At the same time, Fidelity released data showing 20% of 401(k) investors entered the 7-figure club between September 2023 to the end of December 2023.²
Whether you have saved less or contributed more in the past, there are ways to easily boost your 401(k) and get ahead on your retirement savings.
With half a year left, here are 6 things you can do to boost your 401(k).
#1 Don’t Wait. Start Now.
There is a tendency to think resolutions begin and end on New Year’s Day.
When we stop exercising in mid-March, we think, “Oh well. I’ll try again next year.”
This should not be your attitude when it comes to saving for your future.
Rather than waiting for next year to get your financial house in order, start now.
Make today (whatever day it is you are reading this article) the day you turn things around and boost your 401(k) savings.
Even small changes, such as contributing enough for your company match, could yield big returns tomorrow.
#2 Take a Good Hard Look at Your 401(k)
If you want to boost your 401(k), you need to know where you currently stand.
How much do you have saved, what’s your current contribution level, and what are you invested in?
Take a good look at your portfolio and see if it is meeting your financial goals.
The place to find this is your 401(k) statement.
Regularly opening and reviewing your statements helps you determine whether or not you’re on track to meet your financial goals.
For a breakdown of statement sections and in-depth explanation, check out how to read a 401(k) statement and understand it.
#3 Get the Company Match
One of the quickest and most effective ways to boost your 401(k) savings is to increase your contributions enough to get the company match.
If you don’t contribute enough to get the company match, you are turning away free money.
For example, let’s say your company matches 100% up to 6% of your pay.
If you make $40,000 a year, you could put in $2,400 (or 6%) for the year, and your company would match this 100%.
This means if you started contributing 6% halfway through the year, you would still get $1,200 of free money that will continue to grow in your 401(k)!
[Related Read: 4 Ways to Potentially Maximize Your 401(k) Company Match]
#4 Take Some Risks
Many Americans are auto-enrolled in a 401(k) plan, and they never change their plan options.
It may be time to make some changes – especially if you were auto-enrolled in a target date fund.
The issue with target date funds is that investors are grouped solely based on their expected retirement date, while other important traits, such as location, profession, salary, risk tolerance, goals, and objectives, are NOT taken into consideration.
If you want to boost your 401(k) savings halfway through the year, you may need to take some risks, which you cannot do with a conservative target date fund.
The more risks you take, the bigger the potential gains may be.
Consider taking risks, such as having a diversified stock portfolio.
BUT, if you are close to retirement, you may want to do just the opposite and play it safe.
For example, while more risks may mean greater gains, more risks may also mean greater losses.
Now may be the time you need to focus on maintaining and preserving assets.
Take your personal risk tolerance into account.
Do you have time to take some risks? Or is it time to play it safe?
[Related Read: Are Target Date Funds Good or Bad?]
#5 Rebalance Your 401(k) Regularly
Rebalancing is the process of realigning the weightings of your portfolio’s assets (investments) to stay in line with your risk tolerance and retirement timeline.
This means periodically buying or selling assets in your portfolio to maintain the initial desired level of asset allocation.
Whether you have never rebalanced or just haven’t yet this year, now is a good time to rebalance.
When you review your 401(K), ask yourself if the investments you have are working for you.
Rebalancing today may help protect you from losses and give you opportunities to boost your 401(k).
Ideally, you should rebalance your 401(k) every quarter.
Read more in What Every Investor Needs to Know about Rebalancing a 401(k).
#6 Talk with an Expert
If you are feeling discouraged because you aren’t where you hoped to be with your 401(k), reach out to an expert.
Speaking with a financial advisor could give you back the confidence you need to stay the course.
If you noticed mid-way through the year that something wasn’t right physically, you’d seek help from a medical professional.
You should do the same when it comes to your financial situation.
401(k) Maneuver provides independent, professional account management to help employees, just like you, grow and protect their 401(k) accounts.
Our goal is to increase your account performance over time, manage downside risk to minimize losses, and reduce fees that are hurting your retirement account performance.
With 401(k) Maneuver, you can go about your life doing what you love with confidence, knowing we are managing your 401(k) for you.
Have questions or concerns about your 401(k) performance? Book a complimentary 15-minute 401(k) strategy session with one of our advisors.
Sources
- https://www.usatoday.com/story/money/2024/02/29/economy-saving-rate-recession-risk/72790561007/
- https://www.fidelity.com/about-fidelity/Q4-2023-retirement-analysis
