Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

How to Wring More From Your 401(K)

September 22, 2016 at 12:00 AM

You may have heard or read recently about some high profile retirement plan sponsors being sued by plan participants for high fees in the plan. Financial service firms-yep, folks who run mutual funds-have been hit with lawsuits, as have the plans run by MIT, NYU and Yale.

All of this just highlights the importance of making sure you are making the most of your 401(k). I’m not talking about hiring a lawyer! Rather, there are some simple steps you can take today that are going to help you reduce your cost of retirement investing.

Roll Over Old Retirement Accounts Once you leave a job you are allowed to leave your retirement account in the plan (assuming your account is worth at least $5,000) or you can roll it over into an IRA account at a discount broker. You might also check with your new employer; some allow you to roll over an old 401(k) into their plan. Does this take a little bit of time and paper work? Sure. But it can be more than worth your time if you have money sitting in funds that charge annual expenses of 0.25% or more. That’s because there are plenty of low-cost index mutual funds and exchange traded funds (ETFs) that charge as little as 0.10-0.25% in annual expenses. And that can mean big savings. Let’s assume you currently have $50,000 invested in a stock fund in an old plan that charges 1% a year. And let’s assume the portfolio earns a gross return (before expenses) of 6% annualized. Over 20 years if you leave the money in the old fund it will grow to more than $132,000 after accounting for the 1% expense fee. If you move the $50,000 to a brokerage and invest in a stock index fund or ETF that charges 0.10% you will have more than $157,000. See what I mean?

Focus on the Cheapest Options in Your Current 401(k) While you are limited to the funds offered within your plan’s lineup, it’s in your power to choose the lowest cost options. If you have other investment accounts outside of this current 401(k), consider piling all your money into the lowest cost option or your 401(k). Don’t worry if you’re not properly diversified in this specific 401(k). All that matters is that all your retirement savings-across all your different accounts-are well diversified. Once you shift all your savings into the one or two cheapest funds in your current plan, adjust your allocations in your other accounts so your overall allocation makes sense. The same goes for married couples: don’t worry about every individual account being well diversified. All that matters is that your entire nest egg has the right overall allocation. You both should look for the cheapest options in your current 401(k) and then adjust other accounts accordingly.

Tag Cloud

short term goal no tax on withdrawlsautomatic payment4 Must Have Documents GiftSatisfyingbetter loan ratesBaby Boomersretirementdangerous money seasonsecure creditteach your child good money habits15 year mortgagefinancial concernstay positivepresident Obamacostly insurance mistakeBankdental discount planCredit Card Interest RateLegal Guardianautomate student loan payments!00% tuition paidcut monthly cellular billleave a legacyGay Rights3 step financial road mapraising mortgage rates identity theftzero rate transfer dealsbecome member workaholiconly offered while employed healthy youwives should be involved in retirementMoney Marketcar leasingpercentage of women widowed 75-84referrals Long Term Care shoppingFree Debt EliminatorSuze Ormandental insurance Swap Older Annuities or Life Insurance buy home you can affordInflation Benefitdon't charge a pennytaxesearn more on savingsteach importance of helping otherscan you afford itEasy Life Insurance Auto Savings Financial Systemtax refund frauddon't do five year car loannegotiate points with bank or sellerheartacheInfluentialsvalentines day401Kkid borrow firstOne Wallet At A Timebalance transfer money-aware childYoung Adult buying car 2016allowance taskbad decisionsdon't cover cosmetic dentistryno sneaking in feesbe good examplerising home pricesaccelerate dental workSpendingEric Dodge FICO at least 720Combo Insurance ProductsInfluential Celebritycredit unionAccuQuote.comritual schedulepaid in fullPost-Divorcestudent loan repaymentlower rateincreased auto insurance premiumsame-sex marriageprofessional advisorFederal PLUS loanmanage student loansFICO Scoregift not loaneight month living expense lousy investmentno retirement funds for down paymentCommencementfull retirement agesocial security never insolventtoo expensive schoollow down paymentclosing costs 2% of loannot enough life insuranceverify wellness screening and programsEmployer Matched Contributioncollege graduatemobile appMortgage Credit Availability Indexpeace of mindavoid burn outworst financial mistakeHDHP'sstrained relationshipFinancial Cliffpremiumpush yourself to save more for retirementETF'sAmy LacyetFinancial Power of Attorneydo you need life insurancehousing marketenjoy saving don't derail retirement savingsovercome financial fearstax ID theftdon't defer interest paymentsearn allowancebetter termsfinancial argumentscommitlong-term care LTCuniversal college accessMust Have Documentslife insurance name trust as beneficiaryHoliday Shoppingpoint cost offset by savingsco-sign letter to suzeschedule vacationkeep a scheduleplanone annual feereplace permanent life insurance with termcredit utilization rateSchool of Social Work19 years cash flow problemsecured cardbad retirement planningreduce monthly paymentIRA contribution gifted moneyMotherHolidayroth iramortgage brokerpublic service loan forgiveness programfile taxes quicklyhome loan credit score below 740 overspend on giftsARMFHA loan feessocial security not going brokedo not pay allowance for good behaviorbest interest ratesLifestyleprescription tierno waiting periodkids schedule paymentsStock Investments20% down payment avoid feesLong Term Care premiumsadjust allocations Sandy Hook Promise20 year level term monthly benefit fraudulent returnCredit Card Rate IncreaseAshley Springercommunity bankrequire chore in exchange for allowance401(k) Contributionsdebt freebest loan deal multiple lendersgay marriage ban end Florida anticipated salaryAARPget over life insurance phobiafamily save at least $100 monthlyExhibitionMass Mutualmeet monthly The Suze Orman Show2016 adjust estimated taxfiduciary6 month waiting periodshop online guaranteed level term policynon conventional routefederal student loan deferment mental healthCredit scoreinsurance yearly reviewpermanent life insurancehome budget after tax costsetup automatic savings withdrawhigh premiumsdental savings plangrandchild summer job IRA contributionbreakdown projected monthly housing costRevocable Living Trustinterest capitalizationreal estate mistakespay off debtFinancial Gift Cliffaffordabilityget the most out of social security debtno splurge max employer matched 401(k) contribution20% equityhealthy retirement weightSelfishprotect your familyfinancial aidDurable Power of Attorney for Health CareLTC shoppingallowanceFinancial Educatorsocial workdon't spend near historic lowsunexpected expensecnbc alarm clockback-to-school budgetadd teencredit managementprovider of financial supportEmergency Savingsborrowing plan comparison shoppingphysical healthhigher monthly paymentFederal Funds Ratespeak new goalhome buying budgetreal estate market10 year repayment plan WillFederal Stafford loanmoney vowsAdequate Auto and Home Insurancecredit reportStudent Debt Crisislong term goalbuy homeSelectQuote.comstudent loan repayment estimatorpaying for collegeface your financial fearfocus on new truth closing feeshealthy retirement blood pressurecalculate dependents annual income needsquick closingConventional loan PMIsavingssmall changes Long Term Care Insurance high credit score discountRoth 401(k)refinancehigher insurance deductiblebetter loan dealsmortgage disclosuremarriage financial responsibilityonly refinance if it paysgift up to 14,000monthly dental insurance premiumpowerfultitle insurancecostly legal advice for college graduatesincentives for health care wellness screeningsocial securityincrease retirement savingsCPI-Wone credit cardlower overall drug costterm insuranceeliminate credit card debtresponsible with moneyaffordable premiumwomen long term carespring summer women longer life spanloan big picture loan necessitynot gender specific 2015 record year car salesprotect dependent iffy incomeconfident of solutionSuze Orman's Money Warsfocus on needsFinancial Solutions For Yousuitablehome related tax break bonus graduationderailed planwomen outlive menunsubsidized Stafford loanLTCi ASAPretirement accountsinsurancehome ownershipat worst still pay 75% benefitopen enrollment review save loan is giftstandard ratedon't extend mortgage Veterinary Schoolage appropriate goalscompare monthly expensesPay Off Debt Before Retirement20% down paymentlet them have 50% controlHigh Credit Scorecontribution financial independence50 over 50engaged in financeslow mileage discountFinancialhome buying seasonFICO credit score credit card mortgageSave Us Moneyvalue moneyno life insurance financially irresponsiblewrite new goalAlarm Clocklower interest rateCNBCshorter payback periodhigh down paymentwomen live longerraise insurance deductibleFinal Goodbyepay down car loanFinancial Awareness Video FestivalTelepicturesis it kind?8 month safety netemergency fund community collegemax benefit coveredignore 6 month grace period HDHP's are good for youborrow each year, capitalization is going to pile up would you decline a bonuscontribute household expenses 10% donate to charitytraditional vs roth 401(k)Student Loandon't use allowance as briberolloverproperty taxPrime Rate Rise 2015paid vacationpay more than minimum30 year mortgage grandparent IRA contribution maintain standard of livinglower premiumdeath benefit 20 to 25 times annual incomeForbes Top 10get credit cardmortgageMarlo Thomasno late fee is it necessary?Overspendingsavings pleasure2015 financial roadmapclosing disclosureinitial tax break Grace20 to 25 times annual incomecouple financeslearn good financial choicescut monthly cable billautomatic withdraw to savings InterestDeath BenefitUrbana-Champaigncar loannew carGiftsFederal Reserveterm life insurance3 savings buckets mortgage interest tax deductionjuggle multiple financial goalsbe kind to yourselfhome insuranceBankruptcyrepay student loansPBS SpecialSuze is my biggest mentorhealthy teethrequired disclosuresuccessthree year car loanloan no longer than 36monthsForeclosureSandy Hook Elementary SchoolHeartHow To Build CreditHigh FICO Score = Better RateForbeslong term carefinancial goal phrasemake saving a pleasuremax employee match8 month emergency fundFundsretain separate credit cardsdoctor no longer in networkconsider roth 401(k)HDHP's are not badraise deductiblesknow before you owedoctors in networkARM Cautionis it true? HDHP/HSA740 credit score8 RulesPrime Rate IncreaseCD'sfinancing car identity frauddeath benefit needs for familyultimate compounding giftMinor Children Suze changed my lifeBeautyget health insuranceno negativityno interestcollege studenthighest possible benefitCOLACollege of Veterinary MedicineSuze Orman spouse Kathy Travislive below your meansNew american Dream car buying mistakesmarriage inequalityemergency fund savingsresponsibleteens and moneysame sex marriage band end Floridacommissionspercentage men widowed 75-84don't buy wantspay down student loan debtpay 100% cashapproved medical 100% tax-freeTeachconfident2017 Taxesdangerous retirement plan3 bucket approachcreate new truthgift grandchild IRA contributionHSA tax savingsbest interest of investorstudent loan repayment planRetirement Incometelevision hostinsurance mistakestudentadult childrenstandard deduction student loan debtwaive home inspection bidSuze Orman ScholarshipHDHP always use all paid time offPhyllis Shelton expert long-term careunder 18 financial giftNewtownbig results holiday spendingfinancial fearsInvest for savings growth3% debt transferred Revocable Trustburn outGoodbyeCiti Simplicity Card Warner Bros Television GroupSuze approvedMoneyWall Streetraising interest ratesRichbuy down AARP Social security calculatorno fee transferschool pay interest while in schoolhigh FICO scoreoverspend on dining outdebit cardescrowrefundno private loansUniversity of IllinoisStaffords this year have a fixed 6.8% interest rateraise your deductiblestretch out haircut appointmentsRetirement SavingsPersonal Financelowest cost fund optionCory BookerMost Influential Celebrities Listpositiveexercise reguarlyHoliday Seasonprotect loved ones Americans don't use all paid vacation timebudgetUS Tax Codeincrease retirement contribution rate15-year refinance dealMoney-Savingjanuary billsFinancial Awareness2016 adjust withholdingannual cost of living adjustmentbuying a cartake actionemployer offered life insuranceorigination feessummer job match income age appropriate chorefile asapfour steps to retirement savings switch to roth 401(k)children under 18Jose Rodriguezhome buying mistakesteenslow-cost index mutual fundlower mortgage interestLoveloved ones dependent on incomedon't blow tax refundpreexisting condition not coveredCommunication Skills healthy gumsretirment savingscharges on credit cardyours, mine & oursdon't ignore open enrollmentVital Documentsno private loansidelineditemized deductionretirement planreduce withholdingno apologypublic service career student loan repayment verify retirement plan with HR or plan sponsorpay credit debt ASAPlow credit scorebill paying prioritiesFRAcredit cardstore credit cardsFixed Rate MortgageStudent Debtsave moneyrent vs buystaycationreduce interest ratespecial saving accountNew York Lifeoverspend on nights outFiscal Responsibilityemotional stakeslong-term care premiumsalternative FICO scoreswitch to spouse coveragepurely financial standpointBill and Pennydear suzehealthy aging Washingtoncost of capitalization calculatoris it necessarypay high rate off firstincrease emergency savingsFinancial Advicechildren's bookChanging Livesprotect and provide for minor child Civil Rightshigh deductible health care planemployer funding HSAbe true to yourselfGay Couplesdream schoolinterest on student loansback door Roth IRAUniversity of Florida40% toward financial goaldepreciating asset life insurancecompare provider pricing

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel