Hands off that 401k!

By Nick Newton, Kansas City.

Dipping into your retirement nest egg should be a last resort.

I spoke at an investment management conference in Los Angeles in early June. Sponsors of corporate and public plans met to discuss the structure of the pension plans they offer. And the structure of a plan is all about the benefits that are paid to investor, the options available to you as an investor, and how much those options cost.

As I answered questions during a panel discussion, I remembered my first job in the investment business: talking to employees about the importance of saving for retirement with their 401k plans.

I completely understand emergency situations arise, especially in the economy in which we live. But, if at all possible, avoid withdrawing from your 401K plan.

For most of us, our 401K plan will be our primary retirement vehicle. Social Security will be a supplement. That means you owe it to yourself to pay very close attention.  And if you have not started saving, start today.

When my job was to help employees decide their investment options, it was fun, exciting, and I took the responsibility seriously. My most frightening moments were those when an employee approached me after a presentation and said, “I am five years from retirement, and I have not saved the way I should have.”
I implore you today: make sure you are diversified adequately and commit to do everything possible to limit your withdrawals.

Find more information about financial planning:

• My 401k Advice
• Let’s make a plan (Certified Financial Planners)
• Optimum Capital Management
• Social Security Administration Retirement Planner
• USA Today Personal Finance