Kiplinger Today


3 Simple Steps to Make the Most of Your 401(k)

Step 1

Contribute at least enough to get the company match, and aim to kick in 15% of your salary (including the match), up to the annual max of $17,500, or $23,000 for people 50 and over. If that’s a stretch, raise the amount you contribute by one percentage point a year until you hit the target.

See Also: 10 Things You Must Know About 401(k)s

Step 2

Review your plan’s annual statement, which lists the investments, their performance and their annual expenses. Go to to compare your plan’s fees with those of plans at similar-size companies, and talk to your plan manager if you don’t like what you see. Consider changing investments if another choice with lower expenses has comparable returns or better.

Step 3

Check your portfolio annually to see that your asset allocation hasn’t drifted off course, and rebalance if necessary. Some plans offer automatic rebalancing. In your twenties and early thirties, you should have at least 80% in stocks, with the rest in bonds. As you approach retirement, lighten up on stocks.

The payoff

You’ll have plenty of money for a secure retirement.

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