It can seem hard to get a grasp on money matters. Mutual funds and 401(k)s — it all seems so complicated and there’s lots of jargon. But in every worker’s life there certain crisis points where it’s important to make sure your retirement plans are in order. When you first begin your career, you need to make sure that your 401(k) is set up correctly. You need to make sure that your investments are not too conservative. If you’re 25 years old and just at the beginning of a 40 or 50 years’ work life, you need to be aggressive in your stock market picks and in your mutual fund picks. Otherwise your money will never reach its full potential. When your life situation changes, if for instance, you get married or have children, it’s important to review the retirement plans. At that point you may decide a 401(k) rollover to IRA makes sense. Ans then, as you prepare to retire from the workforce, you may decide the rollover is the right move for you and your money. Luckily the 401(k) rules are very clear and offer good guidance on how to make these changes.
A 401(k) to Roth IRA rollover might be the most sensible thing you ever do with your money. By creating a Roth IRA, you are creating a post-tax retirement account. The Roth grows with taxed dollars and this means that you have paid the taxes and when you withdraw the money during retirement, there is no additional tax bill that is due. Having an account like this as part of your portfolio will go a long way toward helping you budget out for your expenses during retirement. People often underestimate how much they need to live on. They either think they’ll continue to work when they no longer want to work or cannot work, or they forget about costly items like prescription drugs that eat in to their nest egg in a big way.
Help create a solid, practical plan for yourself and your loved ones by diversifying your accounts and having a Roth IRA be a substantial part of the portfolio.
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