If you're among the 46% of Americans who have less than $10,000 saved for retirement... Start saving already!  There's no time like the present.  On the other hand, if you have a 401k or 403b, chances are you're not utilizing these sophisticated financial instruments to their fullest capacity.  Below are a few simple things you can do to get the most out of your retirement plan.    

  • Choose Your Own Investment Allocations.  With the exception of Vanguard, most target date funds consistently underperform.  In fact, many underperform significantly. Take matters into your own hands and optimize your portfolio by choosing a diversified cross section of investments consistent with your risk tolerance.   It's easy to do with a bit of homework and feedback from a rep from your retirement provider, and will likely lead to more growth over time.  If you're under 50, consider taking advantage of Father Time by allocating a significant portion of your portfolio towards growth funds.  Still not feeling confident?   Check out Wealthfront’s Risk Tolerance Assessment tool for allocation ideas and set-up a meeting with a representative from your retirement provider. 
  • Use Your Plan to Pay Off "Bad Debt".  Did you know that you can borrow funds from your own 401k or 403b at no cost?   In fact, most plans allow you to borrow up to 50% of your account balance up to $50,000 for five years interest free, and even longer if you're buying a home.  Consult with your retirement vendor or organization's benefits office for your plan's specifics.  
  • Invest to Match, But Don't Go Further.  If your employer matches retirement contributions, contribute enough to get the full match.  Failing to do so is a big mistake, as you're giving money back that, in all likelihood, will grow significantly over time.  Don't invest beyond your match, though.  Why?   Because there are better vehicles for your money.   Traditional and Roth IRAs offer significant tax advantages and investment diversification.  If you're seeking funds that are more liquid, check out Exchange Traded Funds.  Etf's are traded like stocks but offer similar functionality and perks to Mutual Funds.  

Whether you're 25 or 55, small changes to your investments can have huge results.   An individual that nets an average of 7.5% annually on their plan versus 5% is able to earn 60% more over the course of 30 years.  Similarly, one who is able to reduce or eliminate their debt can dramatically improve both their saving and credit potential.  Take a few hours to thoroughly research and optimize your retirement plan.  You'll be richer for it.