There is no need to wait until you retire to take control of your 401(k) – it might work to your advantage to roll it into an IRA for greater flexibility and investment choices. It’s your money after all!
Gone are the days when American workers received a pension when they retired. These days most people have to count on themselves to create an income stream in retirement. Very few people now have pensions. Instead, employers provide employees with retirement accounts, like 401(k)s.
The main benefit of a 401(k) is the potential for a company match. Companies let their employees contribute up to a certain percentage each month, which is matched by the company. However, 401(k)s are also limited in investment options and there are internal costs that many people pay on their accounts.
It’s extremely important to create a plan for your own retirement. Part of this is to take control of your retirement accounts, so your savings are working optimally for your future.
More control. A 401(k) has limited investment options, but if you roll your money into an IRA, you have the entire spectrum from which to choose.
Greater investment options. This lets you allocate your money to match your specific needs in retirement.
More safe havens for your money. An IRA gives you many different options to help protect your investments from a market downturn.
A stretch IRA or multigenerational IRA. These let you automatically set up your account so when the owner of an account passes away, the beneficiaries can stretch their payout over their life expectancies to decrease the tax burden.
Today, it’s imperative that you assume control of your retirement accounts. Be proactive and build your own financial plan to get you successfully to and through retirement.
Reference: Kiplinger (May 2017) “Why Wait Until You Retire to Take Control of Your 401(k)?”