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Financial checkup Q&A: Your 401(k) and how to catch up

Saturday, 24 Aug 2013 | 3:00 PM ET

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We're all pressed for time, but everyone should take a "money minute" every day.

Just spend a minute (or a few, if you can spare) to give yourself a quick financial checkup. Review your bank balances. (Was your last paycheck deposited? Have other checks cleared?)

Pay a bill or two. (Sign up for online bill pay at your bank so you can pay several bills quickly on your laptop or smartphone.) Contact your bank, credit card company or lender for a quick check on an issue that kept you awake last night.

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There may be dozens of financial questions you wish you had answers too. I tackled a few for viewers live on the plaza at The TODAY Show. In our "Money in a Minute" segment, I took questions from the audience on topics ranging from retirement savings to college planning. Here are a few of my answers—with a little more information than I could get to in 60 seconds ...

Question: Should your savings be in a 401(k) as opposed to a college education plan for your kids when saving for college?—Kerry, 47, Maine.

Sharon's answer: A 529 plan is a far better option for college savings than a 401(k) or workplace retirement plan. You should put money for college in an account that is earmarked for college, not in your retirement account. Remember if you rob your 401(k) to pay for college there won't be any scholarships or financial aid to help you cover your expenses in retirement. Keep your retirement money for yourself—and fund a 529 plan for your child(ren). What's great about a 529 college savings plan is that the after-tax money you invest in this account can be withdrawn tax-free to pay for tuition, room and board, fees and other college-related expenses. Plus, many states will offer you a state tax deduction for your contributions. Find out more about 529 plans at www.savingforcollege.com.

(Read more: Retirement alchemy: Less becomes more)

Also, don't feel pressured to foot the entire bill for your child's college education. Parents should view saving for—and paying for—college as a family affair. Your child can apply for scholarships, grants and other financial aid. High school and college students can work while in school and save some of their pay for college, just as you do. Your child may also have to take out loans, but can reduce the overall debt load by choosing a more affordable college. Find out more about saving and paying for college at www.collegeanswer.com.

DNY59 | E+ | Getty Images

Question: I'm in my 30s and I'm afraid I am not putting away enough for retirement. What do I do to make sure I'm on track?—Leslie, 31, New Britain, Conn.

Sharon's answer: Starting to save for retirement in your 20s or 30s will put you much further on the path toward being financially secure later in life. Still, figuring out how much to save for retirement at any age can be daunting.

(Read more: Boomers find second acts pursuing encore careers)

Generally, saving at least 10 to 15 percent of your gross income for retirement is a great place to start. You may need to increase that to 20 percent or more depending on how much money you will ultimately need to meet your expenses in your 60s and beyond. If you have a 401(k) retirement plan at work, make sure you are contributing at least up to the company's matching contribution. Your company may contribute 50 cents or more for every dollar you contribute to the plan—that's free money! Don't miss out!

Overall, you can contribute a maximum of $17,500 to a 401(k) this year. The money that you put into a 401(k) comes out of your pay before taxes, so you're also lowering your taxable income.

You can also save for retirement on your own through an IRA. Roth IRAs, in particular, are great vehicles for retirement savings. You put in after-tax dollars but can take out the money tax-free after age 59½ (as long as you've had the account for five years.) You can contribute up to $5,500 in a Roth IRA this year.

(Read more: Boomers use self-employment to stretch savings)

By CNBC's Sharon Epperson. Follow her on Twitter @sharon_epperson. See more Money News from The TODAY Show at our Facebook and Twitter pages.

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