Opt in to automated help. Saving more and having a diversified investment portfolio are two key pillars of successful retirement saving. Sure, you know that, but following through isn't exactly a snap. That's where your plan might be able to help out.
Many 401(k) plans will automatically increase your contribution rate annually and may offer a service to periodically rebalance your portfolio to align with your long-term goals. The one catch: You have to sign up (opt-in) for these free services.
No auto-escalation? Use open enrollment as your nudge to ask that your contribution rate be increased for 2018. As a general rule, saving 15 percent of pretax income is considered a sweet spot for landing in retirement in good shape. Same goes for rebalancing.
Check out the Roth 401(k) option. Nearly two-thirds of 401(k) plans now offer the option to save in a Roth, in addition to the standard traditional account. "Anyone in the 10, 15 or 25 percent tax bracket should consider saving in a Roth 401(k)" Johnson said.
At those lower tax rates, it's less likely you will fall into a lower tax rate in retirement, boosting the potential payoff of having some tax-free retirement income from a Roth 401(k). Even higher-income savers might want to do some saving in a Roth. In retirement, being able to make tax-free withdrawals to handle unexpected expenses — say a big medical bill — can help you steer clear of tax-bracket creep. That's a big benefit.
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