With all the volatility in the market lately, you might be thinking about changing your 401(k) savings strategy. While you may be tempted to pull money out or reduce your contributions, take a moment to reconsider. "When the market swings, it's only natural to want to fix the situation," says Columbia Vice President Wealth Management, Jill Kusmirek. "But a long-term savings strategy offers valuable advantages." Check the list of long-term savings advantages below and schedule a no-obligation appointment with a Wealth Management representative today to review your overall retirement savings plan.
- You'll be on track to retirement
A 401(k) plan is a great retirement savings vehicle – and the fact is that most Americans have not saved enough for their retirement years. Even if you think you can forego putting money into your 401(k), you could end up short. Additionally, if you withdraw money from a 401(k) plan before you are 59 ½, you'll face a 10% tax penalty (with few exceptions), and you may end up spending money today that could have enjoyed tax-deferred compounding in the future.
- Less of your money exposed to taxes
Usually, contributions to a 401(k) are tax-deductible. If you decide not to make those contributions, here's a consequence: the IRS and your state government will claim more of your income. So you'll wind up with less money in your wallet today and less money in your retirement account.
- Capture free money
If your employer matches your contributions to your 401(k) savings, you don't want to miss out on free money! If your employer matches dollar-for-dollar on the first 3% of a $60,000/year salary, that equals $1,800 of free money! Plus, this money will grow tax-deferred.
- Buy more shares now for less
If you contribute to your 401(k) plan through a dollar-cost-averaging approach, your investment dollar is buying shares at a lower price in a down market – so it is also buying more shares for your money. That could put you in a really good position when the market rebounds.
Securities and investment advisory services are offered through Financial Network Investment Corporation, member SIPC. Financial Network is not affiliated with Columbia Credit Union, or its subsidiaries. The Financial Network registered branch is located at: 3003 NE 62nd Ave., P.O. Box 324, Vancouver, WA 98666. Columbia Credit Union is not affiliated with Financial Network. Advisory Services may only be offered by Investment Advisor Representatives in connection with an appropriate Financial Network Investment Corporation advisory services agreement and Disclosure Brochure (Form ADV 2A), as provided. Not all services are provided at all locations. NOT NCUA/NCUSIF INSURED • NO CREDIT UNION GUARANTEE • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY