According to the Health & Retirement Study, nearly 75% of retirees said they would save more if they could turn back time and do it all over again.
While you can't turn back the clock, you can think ahead. Here are five quick facts about 401(k)s that can help you plan for your retirement:
1. Start saving. If you do not have a 401(k) or other sources of income and are entirely reliant on Social Security, expect things to be tight. This number might motivate you: The estimated average monthly benefit for a retired worker is $1,230. And, before you think, that's not going to be me: A Boston College study says - at any given time - fewer than half of private-sector workers are participating in employer-sponsored savings plans.
2. Set your contribution level. Auto-enrollment has helped increase the number of employees participating at some companies, but analysis indicates people are sometimes being auto-enrolled at savings rates lower than the amount they would have handpicked. Keep in mind, you can adjust your contribution level upward, but you'll need to be proactive about it.
3. Boost your contribution. Some plans allow you to automatically increase the contribution amount each year. This can be a smart way to increase your contribution as you earn more and age.
4. Catch-up contributions. If you are 50 or older, you may be eligible to contribute additional pretax savings through a catch-up contribution.
5. Avoid 401(k) loans. It can be tempting to borrow against your 401(k), especially in this climate since you don't have to explain what the money is for or subject yourself to a credit check. But borrowing from your 401(k) is usually not a good idea because you face, in effect, double taxation and you slow your ability to grow your savings. And if you leave your current employer before the loan is paid, your loan is immediately due in full.
Remember, a 401(k) is not a complete financial plan. Beware of the tendency to think things are "all taken care of," if you have a 401(k). It is only part of a comprehensive retirement plan.
USA Today