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

New american Dream Fiscal Responsibilityearn allowanceInflation BenefitJose Rodriguezbudgetinsurance mistaketeach your child good money habits10% donate to charityrequire chore in exchange for allowanceretirement plancomparison shoppingLong Term Care Insurance How To Build Creditmortgage interest tax deductionlower premiumplandebit cardpremiumreal estate mistakesStudent Loancreate new truth401Kprotect dependent women long term caredon't extend mortgage Americans don't use all paid vacation timeritual schedulesame-sex marriage20% down paymentis it true? only refinance if it paysFinancial Solutions For You20% down payment avoid feesstudentTelepicturesraise deductiblesmax benefit coveredsocial security not going brokeinterest capitalizationraise insurance deductiblefile taxes quicklyaccelerate dental workpercentage of women widowed 75-8415 year mortgageLifestyleno apologyFederal PLUS loanbest interest rateswomen live longerexercise reguarlyForbes Top 10debtcouple financesface your financial fearno splurge is it necessary?term insuranceprescription tieroverspend on giftsEric Dodge get the most out of social security healthy retirement weightFree Debt EliminatorIRA contribution gifted moneyitemized deductionretirement accountsaffordable premiumHDHP'sSuze is my biggest mentordon't ignore open enrollmentshort term goal escrowmanage student loansSuze Orman ScholarshipDeath Benefitlong term careFICO Scorefinancing car highest possible benefitresponsible with moneyInfluentialsno interestStaffords this year have a fixed 6.8% interest ratecredit cardfinancial goal phrasehousing marketbetter loan rates8 month safety netgay marriage ban end Florida cost of capitalization calculatorSuze changed my lifeSuze Orman's Money Warsretirementnon conventional routepay down car loanallowancequick closingMost Influential Celebrities Listburn outStock Investmentsincreased auto insurance premiumlife insurance name trust as beneficiarywaive home inspection bidPrime Rate Rise 2015car loanlousy investmenthigh deductible health care plancollege studentinsurance yearly reviewidentity fraudAARP Social security calculatorallowance taskPhyllis Shelton expert long-term careincrease retirement contribution rateSuze Orman spouse Kathy Travishigh down paymentemployer funding HSA3 bucket approachdental discount planstudent loan repaymenthome buying mistakes2016 adjust withholdingprotect and provide for minor child emergency fund roth iraBankruptcyMust Have Documentslow-cost index mutual fundHigh FICO Score = Better Rateschool financial argumentsdepreciating asset costly legal pay off debtresponsibleaffordabilityCommencementdear suzereduce interest ratenot enough life insuranceFundsiffy incomeSelectQuote.com50 over 50buying a cardon't blow tax refundpaid in fulloverspend on dining outbad retirement planningno sneaking in feesPay Off Debt Before RetirementGoodbye10 year repayment plan anticipated salaryfocus on needsget credit cardeliminate credit card debtone credit cardGay Rightsno tax on withdrawlstax ID theftborrowing plan CD'sPBS Specialhigh premiumsRetirement Incomemaintain standard of livingTeachautomatic paymentstaycationmortgagehome ownershipBill and PennyStudent Debtcostly insurance mistakepaying for college20 to 25 times annual incomecar buying mistakesyours, mine & ourssmall changes schedule vacationFinancial Cliffbecome member HDHP raise your deductiblekids schedule paymentsGiftsmoney-aware child19 years cash flow problemteensswitch to roth 401(k)sidelinedmortgage disclosureloan necessitychildren under 18get over life insurance phobiaRevocable Living Trustdo not pay allowance for good behaviorbe good exampledental insurance 3 savings buckets healthy gumswomen outlive menpaid vacationMoney MarketMoney-Savingsavings pleasureCommunication Skills InterestFixed Rate MortgageARMcompare provider pricingnew carget health insurancelow down paymentcollege graduatetax refund fraudFinancial Power of Attorneyorigination feesCory Bookereight month living expense holiday spendingprovider of financial supportapproved medical 100% tax-freeRichLovereal estate marketstandard rateARM Cautioncut monthly cable billknow before you owebest loan deal HDHP's are good for youback door Roth IRAvalentines day4 Must Have Documents lowest cost fund optionsocial securityrequired disclosuredoctors in networkavoid burn outpay interest while in schoolCombo Insurance Productsalternative FICO scoreCredit scorestudent loan repayment estimatorretirment savingsrolloverPersonal FinanceFICO credit score credit card mortgage20% equitycredit managementCPI-WFinal Goodbyeterm life insuranceFinancial EducatorCollege of Veterinary Medicinerefundcredit uniondon't cover cosmetic dentistryMotherWillExhibitioncar leasingLong Term Care premiumsFRAno life insurance financially irresponsiblepreexisting condition not coveredrefinanceuniversal college accessno fee transferInvest for savings growthgrandparent IRA contribution Mass Mutuallower rateFederal Stafford loanBankreduce monthly paymentdeath benefit 20 to 25 times annual incomereplace permanent life insurance with termmake saving a pleasureultimate compounding giftspeak new goalSandy Hook Elementary SchoolSchool of Social Workgrandchild summer job IRA contributionPost-DivorceLTCSave Us Moneyfour steps to retirement savings Vital Documentslower mortgage interestshop online guaranteed level term policySwap Older Annuities or Life Insurance New York Lifegraduationchildren's bookdeath benefit needs for familybuy down Beautyfinancial aidMarlo Thomassetup automatic savings withdrawFinancial Gift Cliffcommunity bankloved ones dependent on incomecredit reportstay positivedebt freehealthy retirement blood pressureSatisfyingAccuQuote.comBaby Boomersonly offered while employed three year car loanunexpected expensecompare monthly expensesgift not loanfamily save at least $100 monthlyadvice for college graduatesnegotiate points with bank or sellerstandard deduction balance transfer age appropriate chorewives should be involved in retirementfinancial fearshome loan credit score below 740 gift grandchild IRA contributionUniversity of IllinoisAuto Savings protect your familyno waiting periodcommunity collegezero rate transfer dealstitle insuranceFederal Funds Raterepay student loansovercome financial fearscut monthly cellular billCNBCMoneypoint cost offset by savingsMortgage Credit Availability IndexHSA tax savingsHDHP's are not badstretch out haircut appointments8 month emergency fundpay down student loan debtsuccesscnbc alarm clockautomatic withdraw to savings adjust allocations high credit score discountHolidayCredit Card Rate Increasedon't buy wantsFederal Reservedangerous money seasonpermanent life insuranceThe Suze Orman Showmobile apppublic service career student loan repayment taxesdon't do five year car loanlife insuranceletter to suzeno private loansmarriage financial responsibilityAshley Springer!00% tuition paidverify wellness screening and programsForbesunder 18 financial giftopen enrollment review don't charge a pennyfocus on new truth teens and moneykeep a scheduleretain separate credit cardshigh FICO scorestore credit cardspay high rate off firstHoliday Shoppingno retirement funds for down payment3 step financial road mapshorter payback periodbe true to yourselfdental savings planhigher insurance deductiblefederal student loan deferment US Tax Codeadd teenAARPproperty taxWall Streetemergency fund savingshealthy aging healthy youleave a legacyjuggle multiple financial goalsAdequate Auto and Home Insurance2017 TaxesheartacheRetirement SavingsCOLAfinancial independencepresident ObamaGay Coupleslong-term care 40% toward financial goalmarriage inequalityChanging LivesGiftUrbana-ChampaignAmy LacyetHoliday SeasonSpendingtraditional vs roth 401(k)age appropriate goalsignore 6 month grace period LTCi ASAP2015 record year car salesEmergency Savings15-year refinance dealFinancial Advicecan you afford itworkaholicmeet monthly Financial Awareness Video Festivalpositivesave money30 year mortgage co-sign switch to spouse coverageMinor Children credit utilization ratefull retirement agemental healthlet them have 50% controlInfluential Celebritypercentage men widowed 75-84University of Floridamonthly dental insurance premiumdoctor no longer in networkcommitfile asappush yourself to save more for retirementForeclosurestrained relationshipsavingsVeterinary SchoolETF'sloan no longer than 36months2016 adjust estimated taxconfident of solutiondon't use allowance as bribeborrow each year, capitalization is going to pile up 3% debt transferred confidentadult childrenwrite new goaljanuary billsOverspendingbuying car 2016lower interest ratemonthly benefit bad decisionsinsurancerent vs buyone annual feemortgage brokerreferrals Financialstudent loan debtinitial tax break contribution Roth 401(k)summer job match income Long Term Care shoppingderailed planFHA loan feesemployer offered life insurancedream schoolbuy home you can affordsocial security never insolventwomen longer life spanHigh Credit Scoreis it necessaryloan is giftmoney vowshealthy teethstudent loan repayment planprotect loved ones unsubsidized Stafford loanworst financial mistakeloan big picture incentives for health care wellness screeningSelfishfinancial concernlive below your meansCiti Simplicity Card better loan dealsat worst still pay 75% benefitspecial saving accounthome insuranceinterest on student loanscontribute household expenses television host6 month waiting periodsecured cardsecure creditspring summer pay 100% cashpowerfulpurely financial standpointLTC shoppingdon't defer interest paymentsis it kind?no private loandon't derail retirement savingsrising home pricesdangerous retirement planno late fee Legal Guardiantake actionoverspend on nights outSuze Ormanmax employer matched 401(k) contributionEasy Life Insurance be kind to yourselfhome buying seasonlong-term care premiumsmax employee match8 Rulesnear historic lowshome buying budgetenjoy saving consider roth 401(k)pay credit debt ASAPHDHP/HSAAlarm Clockemotional stakesnot gender specific closing costs 2% of loanlearn good financial choicesdo you need life insurancewould you decline a bonuspay more than minimumannual cost of living adjustmentSandy Hook Promisehome related tax break bonus earn more on savingscharges on credit cardlower overall drug costhigher monthly paymentverify retirement plan with HR or plan sponsorOne Wallet At A Timeincrease retirement savingsPrime Rate Increasebig results Warner Bros Television Groupkid borrow firsttoo expensive schoolDurable Power of Attorney for Health Careraising interest ratesCivil RightsNewtownclosing feessave reduce withholdingraising mortgage rates low credit score2015 financial roadmapFinancial Awarenessgift up to 14,000automate student loan paymentsSuze approvedvalue moneyback-to-school budgetalways use all paid time offbreakdown projected monthly housing costGrace740 credit scoreincrease emergency savingspeace of mindpublic service loan forgiveness programWashingtonsocial workclosing disclosurehome budget after tax costFinancial SystemRevocable Trustphysical healthno negativityStudent Debt Crisismultiple lendersbill paying prioritieslong term goal401(k) Contributionscalculate dependents annual income needsEmployer Matched ContributionCredit Card Interest Ratedon't spend identity theftbuy homeYoung Adult Heartteach importance of helping othersbetter termsFICO at least 720same sex marriage band end FloridaConventional loan PMI20 year level term fraudulent returnlow mileage discount

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