Seven Reasons to Enroll in Your 401k Plan
1. A 401k plan can be one of your best tools for creating a secure retirement. It provides you with an important advantage: All of the contributions and earnings to your 401k are tax-deferred, which means you only pay taxes on contributions and earnings when the money is withdrawn in retirement. This is a retirement savings plan you cannot afford to pass up!
2. Unlike traditional 401k plans, the Advisors Access 401k provides you with professionally managed portfolios. You don’t have to decide how much to allocate to each different fund - you simply decide which strategy is right for you.
3. The Advisors Access 401k portfolio strategies are constructed using sophisticated, institutional mutual funds that are not available to individual investors. Among these fund companies is Dimensional Fund Advisors (DFA), which manages more than $100 billion for the likes of General Motors, Boeing, and the Carnegie Foundation.
While DFA may not be a familiar name to you because they work strictly with large institutions and approved investment advisors, DFA is very well known in the investment community. In fact, Paul Merriman of CBS Marketwatch said, “If we could choose only one family of funds for the ideal 401k plan, it would be Dimensional Fund Advisors. We believe DFA's institutional funds are the best, and employees whose plans include them are fortunate.”*
4. In retirement you will need funds other than Social Security to pay for living expenses. It’s up to you as an individual investor to plan for your own future. The Social Security Administration estimated in 2000 that Social Security will provide only 38-40% of an average retiree’s living expenses.
5. A long time horizon is your biggest advantage. The sooner you begin investing, the sooner you can achieve your investment goals. Thanks to the power of compound interest, even investing a small amount on a regular basis over time can provide a substantial nestegg by the time you reach retirement age.
6. If your company provides a matching program, it is extra compensation for you. You surely wouldn’t turn down a raise from your employer - and that’s what a matching contribution is!
7. Automatic payroll deduction makes it simple to save and reduces the temptation to spend the money. You can relax while investing this way, because you know your money is being invested automatically before you ever see it in your paycheck!
* A World-Class Menu of Investment Funds”, CBS Marketwatch, May 2002
For other Participant Education resources, please click below.