Financial Planning

If you want to get serious about saving money, in particular saving for retirement, make sure that you don’t have any stray 401k accounts out there. If you left your last job without executing a 401k rollover, then you have that money sitting out in an account somewhere languishing. Do the 401k rollovers you need to do so that all of your money sits in one place working as hard as it can for you.

When I talk with people about saving money and about getting motivated to save money towards retirement, what I hear more than anything else is a sense of hopelessness. It seems so hard to save money and if you do, it’s hard to see the results. In other words, it is hard to sacrifice something today for a promise of tomorrow. They feel giddy if they can have $50 or a hundred dollars left at the end of the month and putting that money into a savings account or adding it to an IRA feels great for the first few months. But then, when you get your statement and you see that your $1,000 is now $1,035 well it’s hard to celebrate $35 win. You think How is $35 going to help me retire with dignity?

This is where the 401k plan rollover really shows its merit. The influx of extra money to the account will jump start that growth and make you see the benefits of saving. The 401k  rollover account grows with each dollar you add and by adding a bunch all at once, you’ve given it a shot in the arm. When you next get your statement (barring a serious down turn in the market) you will see marked improvement. Don’t be afraid to consider a 401k rollover/IRA or a 401k rollover/Roth as an option. You do not have to keep every penny in only one account. As you discover the joy of not spending money, you may find that you would like another investment fund. An IRA is a great choice, whether pre-tax like an IRA or post-tax like a Roth.

You could decide that the rollover account should fund a Roth IRA so that you have funds that will not be taxed when you begin to withdraw money during retirement. The 401k rollover to a Roth IRA is as simple as any other type of transaction. Adding money to a Roth is as easy as adding monthly money to a 401k. All it takes to win at the retirement game is patience and persistence.