How to hack your 401k

Keep track of your 401K and retire rich! Credit: Getty Images
Grow your 401k with a few, easy habits.
Credit: Getty Images

Wish you could wave a magic wand and make your 401k a whole lot bigger? These three hacks come pretty close to working some magic.

“Retirement is going to be long, and it’s going to be expensive,” says Liz Weston, author of “The 10 Commandments of Money.” ”You want to maximize every penny you’re saving.”

Save (even a little) more

Any idea how much you’re saving? The ideal amount is about 15 percent, says Weston, “but 20 percent is even better,” given your longevity and likely medical expenses as you age. If that sounds like a lot to sock away each pay period, do it gradually. At least get the company match if there is one. (Some companies throw in 50 cents for every $1 you save, up to 6 percent of your paycheck.)

Or increase your contribution by 1 percent per year. If you get paid twice a month and make $100,000 per year, and are in the 28 percent federal and 5 percent state tax brackets, your extra 1 percent contribution will be only $27.92 per paycheck. “Auto-increases are a powerful way to almost painlessly save more,” says Alex Benke, Betterment’s CFP®. Check whether your plan offers this.

Reduce costs

New government rules require your 401k provider to show how much you’re paying in fees. If your statement isn’t totally clear, speak to a plan rep. Your “all-in” (total) costs should be no more than 1 percent per year of your total balance — and ideally less. What to do now: If you’re not invested in these already, switch to low-cost index funds, exchange-traded funds (ETFs), or even an inexpensive target-date fund. If these aren’t offered by your plan, ask your employer why. “Many people don’t realize that their employer has a choice in what funds they can offer,” says Benke. If index funds are available, you could do a lot worse than choosing a broad stock market fund (like an S&P index fund) and a bond index fund, if available, says Weston. The two-fund system is limited, true, but investing now is better than waiting “to learn more” and losing out on potential market returns.

Rebalance

What’s the right balance of equities versus bonds in your retirement portfolio? Many people use the formula of 100 minus their age to decide the percentage of equities versus fixed income. Whatever you decide,  that allocation will shift as the market moves. If you’re 40 and started with a 60-40 allocation of stocks to bonds/cash, you could be at 70-30 now, which is a more aggressive allocation (i.e. you’re taking on more risk for the possibility of greater returns). What to do now: To get back to your desired allocation, you may need to sell equities (in this case) and put more money into bonds. Rebalancing is crucial to keeping returns steady.

Last, if you have a 401k from an old employer, don’t let it linger in limbo. You’re likely paying high fees on that account. Roll it over into an IRA, so you can resume saving.



News
Entertainment
Sports
Lifestyle
Local

Brooklyn man charged in roommate's stabbing death

A Brooklyn man accused of violently stabbing his roommate to death on Monday is in police custody and faces murder charges.

International

Dinosaurs could have survived asteroid strike

It turns out there is a good and a bad time for the planet to be hit by a meteor, and dinosaurs were just unlucky.…

National

OkCupid admits to Facebook-style experimenting on customers

By Sarah McBrideSAN FRANCISCO (Reuters) - OkCupid, a top U.S. matchmaking website, intentionally mismatched users to test its technology, the IAC/InterActive Corp service said on…

Local

MTA fares still increasing 4 percent in newly…

The agency said the 4 percent increases, previously announced in December, will remain steady even as the MTA deals with increasing labor costs.

Movies

Interview: Brendan Gleeson on the way 'Calvary' depicts…

Brendan Gleeson talks about how his new film "Calvary" began over drinks and how his character here is the opposite of the lead in "The Guard."

Movies

'Get on Up' producer Mick Jagger on the…

Mick Jagger, a producer on the James Brown biopic "Get on Up," talks about the time had to tell the singer some bad news and his favorite JB record.

Television

'Glee' star Lea Michele to appear on 'Sons…

"Glee" star Lea Michele has been confirmed as a guest star in the final season of "Sons of Anarchy."

Television

TV watch list, Monday, July 28: 'The Bachelorette'…

See Andi Dorfman make her big choice on tonight's 'Bachelorette' finale.

MLB

Angelo Cataldi: Ryan Howard deserves better from Phillies

Just last week, Ryan Howard endured the embarrassment of a benching that was inevitable, and yet still shocking.

NFL

Larry Donnell has inside track in Giants tight…

Little-known Larry Donnell of Grambling State currently has the inside track, as the second-year player has received the bulk of the first-team reps.

NFL

Computer to Jets: Start Michael Vick over Geno…

Jets general manager John Idzik says the choice of who starts between second-year quarterback Geno Smith and veteran Michael Vick will be a “Jets decision.”

MLB

Yankees looking to trade for Josh Willingham: Report

CBS Sports’ Jon Heyman reported Sunday the Yankees are interested in Twins outfielder Josh Willingham.

Travel

Glasgow: Hey, hey, the gangs aren't here

This European city has done a good job getting rid of its more violent residents and revitalizing with artists.

Education

Babson College tops list of best colleges for…

Money magazine has just released its inaugural list of "The Best Colleges for Your Money" -- and the answers have surprised many. Babson College, which…

Education

NYC teens learn how to develop apps during…

Through a program sponsored by CampInteractive, the high schoolers designed their own community-focused apps.

Tech

The Ministry of Silly Walks app is both…

Monty Python have dug into their back catalogue for cash-ins once more, but with the Ministry of Silly Walks app, they've made something that's fun too.